Stock prices closed mixed today as investors cheered the government's pledge to lend as much as $17.4 billion to U.S. automakers but remained dubious...
NEW YORK — Stock prices closed mixed today as investors cheered the government’s pledge to lend as much as $17.4 billion to U.S. automakers but remained dubious that the money will make a lasting difference for the beleaguered industry.
The Dow Jones industrial average rose by as much as 182 points in the early going, turned lower at midday, recovered in the afternoon, but closed the session down 25.88, or 0.3 percent, at 8,579.11.
Broader market indexes edged higher. The Standard & Poor’s 500 index gained 2.59, or 0.3 percent, at 887.87, and the Nasdaq composite index was up 11.95, or 0.8 percent, at 1,564.32.
The decision to provide emergency help to carry the struggling auto industry into the new year comes after a $14 billion bailout for Detroit automakers failed to make it out of the Senate last week.
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The companies’ cash flows have been dwindling to a slow trickle due to the weak economy, slumping sales and the credit crunch.
The White House said it will let General Motors and Chrysler draw $13.4 billion in short-term financing, and another $4 billion will be added later. But it attached conditions that must be quickly met — GM and Chrysler must prove viability, defined as positive cash flow and the ability to pay back government loans, by March 31. Ford, meanwhile, is not asking for short-term assistance, but its CEO predicted the aid will stabilize the broader industry.
General Motors CEO Rick Wagoner said the company had much work ahead, but he was confident it could reinvent itself with the government help.
Some analysts expressed doubts, however.
“I think that there’s a lot of skepticism about how much real reform we’re likely to see, particularly at GM, given the parameters under which the loans have been made,” said Alan Gayle, senior investment strategist at RidgeWorth Investments. “There is a lot of skepticism about whether GM is prepared to do what needs to be done.”
Yields on long-term Treasurys recovered from record lows today. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.13 percent from 2.07 percent late Thursday. The yield on the popular three-month T-bill — whose yield has at times gone negative due to frenzied buying — rose slightly to 0.01 percent from zero late Thursday.
Light, sweet crude for January delivery fell $2.35 to $33.87 a barrel on the New York Mercantile Exchange.
The dollar rose against other major currencies. Gold prices fell.
Markets overseas were mostly lower. Japan’s Nikkei stock average slipped 0.91 percent, while Hong Kong’s Hang Seng index sank 2.39 percent. Britain’s FTSE 100 was down 1.01 percent, Germany’s DAX index fell 1.26 percent, and France’s CAC-40 fell 0.26 percent.