After plummeting earlier, stocks found some upward momentum on Friday on news that the Treasury Department and White House might step in to help the auto makers following the collapse of a $14 billion bailout bill in the Senate last night.
Today’s Markets
The Dow Jones Industrial Average gained 64.59 points, or 0.75%, to 8629.68 at the 4 p.m. ET preliminary close in NewYork.The broader S&P 500 Index gained 6.29 points, or 0.72%, to 879.88 and the Nasdaq Composite Index was higher by 32.84 points, or 2.18%, to 1540.72. The consumer-friendly FOX50 Index rose by 5.26 points to 686.63.
The Dow was down some215 points in earlier trading after world markets plunged overnight.
Both General Motors (GM) and Ford (F) opened considerably lower this morning -- falling more than 30% and 20% respectively -- after the auto deal had failed in the Senate. However, as details emerged that the White House and Treasury would step in to help, both stocks recovered the bulk of their losses, and Ford moved into the green.
Other members of the Dow in heavy trading included United Technologies (UTX), which warned that earnings would be lower in 2008, and Bank of America (BAC), which said it would to cut as many as 35,000 jobs over the next three years.
The technology stocks soared Friday, with Nasdaq heavyweights Apple (AAPL), Google (GOOG), Intel (INTC), Oracle (ORCL) all trading higher by more than 3%. The big tech stocks pushed the Nasdaq much higher than its cousin indices.
In the commodities markets, oil closed down $1.78 to $46.28 a barrel while gold was lower by $7.30 to $819.30 an ounce.
Auto Bailout Bill Dies in Senate, Treasury Comes to the Rescue
The proposed $14 billion bailout bill collapsed Thursday evening after the Senate voted 52-35 in a procedural vote -- well short of the 60 votes needed to override a filibuster. However, the Treasury Department will likely be throwing the auto makers a lifeline, sources close to the discussions told FOXBusiness.
According to sources, the Treasury Department will provide funds to the auto makers in exchange for concessions that were already found in the Senate Bill that died Thursday evening.
It's not clear if the funds would come from TARP, but the Treasury is considering that an option. The funds would be available for the auto makers immediately.
A Treasury spokesperson denied they were considering giving money to the auto makers and referred to an earlier statement, where they said, “because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry.”
A General Motors spokesman said Friday they were "encouraged" by the moves by the White House and Treasury Department.
Company News
United Technologies (UTX) said it sees earnings for 2008 at $4.90 a share, short of the $4.94 estimate expected by analysts. United now sees 2009 earnings at $4.65-$5.15 a share, compared with analysts’ expectations of $5.01 a share.
Honda Motor Co. (HMC) announced an output reduction of 119,000 units by the end of its fiscal year.
A proprietary trading group inside Deutsche Bank (DB), according to The Wall Street Journal, has lost more than $1 billion by being on the wrong side of several bets related to corporate bonds.
AT&T (T) announced it would raise its quarterly share dividend by 1 cent to 41 cents a share, despite recent job cuts and a plan to cut spending in 2009 due to a slower economy. AT&T announced last week it would cut 12,000 jobs.
The Detroit Free Press, which is owned by Gannett Corp (GCI), is likely to announce home delivery cuts to thee days a week, according to a report by The Wall Street Journal.
World Markets
Global markets fell significantly after auto bailout failed. The Dow Jones Euro Stoxx 50 Index, a gauge of the 50 largest companies in Europe, dropped nearly 2.7% on Friday. In the individual markets, London closed down 2.5%, Paris was down 2.8% and Germany was down 2.2%. Trading in Russia was halted on the bailout news.
In Asia, Japan’s Nikkei fell 5.56% overnight, while Hong Kong’s Hang Seng dropped nearly 5.5%.
Data Dump
The U.S. Labor Department said the producer price index for November, or wholesale inflation, fell 2.2% from the month before. That was in line with what economists were expecting, who were looking for a decline in 2.3% in wholesale inflation. Excluding volatile food and energy costs, wholesale inflation was up 0.1% - also in line with estimates.The massive drop inflation was primarily caused by the drop in the price of oil, which fell 11.2% in the month.
The government also said U.S. retail sales dropped by 1.8% last month. The 1.8% drop was mildly better than the expected 2.2% decline in sales.
The University of Michigan consumer sentiment survey came in better than expected. The University said consumer sentiment came in at a reading of 59.1 for December, up from 55.3 in November. Economists interviewed by Thomson Reuters were expecting the University of Michigan index to fall 0.3 points to a reading of 55.
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