US stocks climbed today after the government expanded its bailout of the auto industry, bolstering hopes that lawmakers would continue to take steps to minimise the severity of the year-long recession.
The Bush administration said last night it would extend an additional $1 billion loan to General Motors Corp and take a $5 billion stake in the automaker's financing arm, GMAC, in the latest move to ease the credit crisis.
Today, GMAC announced easier financing terms for car and truck buyers and GM announced zero per cent financing for some vehicles, which could help bolster sales.
GM shares jumped 4.7 per cent and rival Ford Motor Corp rose 1.4 per cent.
"The GMAC news is the driver of the lot." said Steve Sachs director of trading at Rydex Investments, Rockville, Maryland. "The government has been telling us for months that they will do whatever it takes and there is probably more of it in store as we get to the inauguration and a few weeks past that."
The Dow Jones industrial average was up 107.52 points, or 1.27 per cent, at 8,591.45. The Standard & Poor's 500 Index was up 11.82 points, or 1.36 per cent, at 881.24. The Nasdaq Composite Index was up 24.08 points, or 1.59 per cent, at 1,534.40.
The Nasdaq was boosted by shares of big-cap technology companies that have larger cash reserves and are seen as better positioned to withstand the economic slump.
Shares of Qualcomm Inc, the wireless chip maker, rose 1.6 per cent to $34.63, while software maker Oracle Corp gained 2.9 per cent to $17.71, putting them among the top boosts on the Nasdaq. International Business Machines Corp was the leading advancer on the Dow, rising nearly 2 per cent to $82.85.
Investors shrugged off another round of economic reports that pointed to a deepening recession. Prices of single-family homes plunged a record 18 per cent in October, while consumer confidence also fell to a record low.
Stocks have had difficulty mounting a significant year-end rally. The broad S&P 500 is down 40 per cent for 2008, making it one of the worst years ever.
Reuters