Wall Street staged a big advance in the next to last session of 2008 Tuesday after Washington's latest lifeline to the auto industry bolstered...
NEW YORK — Wall Street staged a big advance in the next to last session of 2008 Tuesday after Washington’s latest lifeline to the auto industry bolstered hopes that the government will do whatever is necessary to cut short the recession.
Investors found solace in news that General Motors Corp.’s troubled financing arm received $5 billion of financing. The Treasury Department said late Monday it would provide the money to GMAC Financial Services LLC from the $700 billion bank rescue program.
The injection is on top of the $17.4 billion in loans the Bush Administration agreed to provide to the auto industry on Dec. 19. GMAC said Tuesday it would immediately resume lending to certain customers it had previously said were too great a risk for auto loans because of tight credit markets.
“This is trying to slow down the economic train wreck,” said Jack Ablin, chief investment officer at Harris Private Bank. “Investors are taking a step back, and realizing that this will enable auto buyers to finance their cars and add liquidity to the market.”
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Ablin also said the move will have an effect on the entire economy, especially amid a backdrop of sluggish consumer spending, which drives more than two-thirds of the U.S. economy.
Wall Street got another disappointing reading about the mood of Americans after the Conference Board reported its Consumer Confidence index dropped to a record low. The trade group reported the index’s reading fell to a 38 in December from a revised 44.7 in November, well below the expectation of 45 economists surveyed by Thomson Reuters.
Investors were well prepared for a downbeat report after consumers reluctant to spend left retailers with their worst holiday season in years. The International Council of Shopping Centers said Tuesday that weekly same-store sales, those from stores open a year or more, dropped 1.5 percent last week at the 40 retailers it polls.
Stocks pulled back somewhat after the consumer confidence report was released, but quickly bounded higher. According to preliminary calculations, the Dow Jones industrial average rose 184.46, or 2.17 percent, to 8,668.39.
Broader indexes also moved higher. The Standard & Poor’s 500 index rose 21.22, or 2.44 percent, to 890.64; while the Nasdaq composite index added 40.38, or 2.67 percent, to 1,550.70.
With many traders away for the holidays, volume is low, which can exaggerate price moves. Advancing issues led decliners by a 4 to 1 basis on the New York Stock Exchange, where volume came to an extremely thin 706.5 million shares.
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