Wall Street set aside fears that the U.S. auto industry would soon collapse after the Treasury Department said it was prepared to funnel cash to the nation's Big Three automakers. Stocks pulled off sharp losses and edged higher in late afternoon trading.
NEW YORK — Wall Street set aside fears that the U.S. auto industry would soon collapse after the Treasury Department said it was prepared to funnel cash to the nation’s Big Three automakers. Stocks pulled off sharp losses and edged higher in late afternoon trading.
The Dow Jones industrial average was down more than 200 at the open, but it rallied and closed up 64.59, or 0.8 percent at 8,629.68.
Broader market indexes also were higher. The Standard & Poor’s 500 index rose 6.14, or 0.7 percent, to 879.73, and the technology-heavy Nasdaq composite index gained 32.84, or 2.2 percent, to 1,540.72.
All the major indicators began to regain ground when the White House and the Treasury announced they were considering diverting money from the Wall Street rescue fund to stave off bankruptcy filings among the U.S. carmakers.
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“Things are looking a little bit brighter after they made those announcements,” said Anthony Conroy, managing director and head trader for BNY ConvergEx Group. “Anytime there’s indecision, that indecision breeds volatility. And that’s what we were seeing.”
Stocks fell sharply in the early going after a $14 billion rescue package for the automakers was derailed in the Senate late Thursday when the United Auto Workers refused to meet Republican demands for big wage cuts. Lawmakers have called on the Bush administration to use a portion of the $700 billion financial rescue to help the car companies.
General Motors and Chrysler have said they could run out of cash within weeks without government help. Ford, which would also be eligible for aid under the bill, has said it has enough cash to make it through next year.
“The market’s been pretty resilient,” said Matt King, chief investment officer of Bell Investment Advisors, noting that Wall Street has at times since mid-November advanced even in the face of bad news. “The market’s been holding firm and making some good gains. So to us that’s a good sign.”
Oil prices rallied from early lows capping a volatile week in which prices surged on the back of a weakening dollar, and also the potential for severe production cuts from OPEC.
“We are being torn in a lot of different directions,” said Phil Flynn, an analyst at Alaron Trading.
Oil prices, off by as much as 7 percent earlier in the day, fell $1.70 to settle at $46.28 a barrel on the New York Mercantile Exchange.