Wall Street averts losses as auto rescue hopes revive
Sunday, 14 December 2008
NEW YORK, Dec 13 (AFP): Global stock markets came under heavy pressure yesterday as fears mounted of a collapse of the Big Three US automakers but Wall Street rebounded after the White House vowed to come to Detroit's rescue.
The Dow Jones Industrial Average gained 0.75 per cent to close at 8,629.68, shaking off early losses.
The Nasdaq composite rallied 2.64 per cent to 1,540.72 and the broad Standard & Poor's 500 added 0.70 per cent to 879.73.
"Wall Street survived an unnerving start and finished on an upbeat note today, as confidence grew that the government will not let automakers fail," said Al Goldman at Wachovia Securities.
The market opened weaker as last-ditch talks on the 14- billion-dollar package for the Big Three US automakers, backed by Democrats and the White House, broke down late Thursday.
But stocks pared their losses and managed to move higher after the White House said it was considering tapping into a 700- billion-dollar financial rescue fund to keep the auto industry alive.
"The automakers' last hope is the White House," said Sean Maher at Economy.com, and pointed to some estimates of 2.5 million job losses if the auto sector collapses.
"Without government assistance, therefore, it is likely that the automakers will be forced to liquidate assets. This would be the absolute worst-case scenario for the nation, intensifying what we already expect will be the worst recession since the 1930s," Maher said.
The market also digested economic data showing a sputtering economy.
US retail sales fell for the fifth straight month in November, dipping 1.80 per cent amid weak consumer sentiment and tight credit conditions in a deepening recession.
A separate report showed US wholesale prices fell 2.20 per cent in November led by plunging energy prices, in the fourth straight month of decline.
The falling prices and weak spending raised concerns about a deep recession and deflation that will pressure the Federal Reserve to cut interest rates close to zero.
The dollar in turn fell sharply, hitting a 13-year low against the yen.
European stock markets were down despite the European Union's announcement of a 200-billion-euro (US$260 billion) economic stimulus plan aimed at digging the bloc out of recession.
London's FTSE-100 closed down 2.47 per cent, in Paris the CAC 40 was down 2.80 per cent and the Frankfurt Dax lost 2.18 per cent.
In other markets, Brazil's Bovespa advanced 2.22 per cent and Canada's S&P/TSX added 1.22 per cent.
The Dow Jones Industrial Average gained 0.75 per cent to close at 8,629.68, shaking off early losses.
The Nasdaq composite rallied 2.64 per cent to 1,540.72 and the broad Standard & Poor's 500 added 0.70 per cent to 879.73.
"Wall Street survived an unnerving start and finished on an upbeat note today, as confidence grew that the government will not let automakers fail," said Al Goldman at Wachovia Securities.
The market opened weaker as last-ditch talks on the 14- billion-dollar package for the Big Three US automakers, backed by Democrats and the White House, broke down late Thursday.
But stocks pared their losses and managed to move higher after the White House said it was considering tapping into a 700- billion-dollar financial rescue fund to keep the auto industry alive.
"The automakers' last hope is the White House," said Sean Maher at Economy.com, and pointed to some estimates of 2.5 million job losses if the auto sector collapses.
"Without government assistance, therefore, it is likely that the automakers will be forced to liquidate assets. This would be the absolute worst-case scenario for the nation, intensifying what we already expect will be the worst recession since the 1930s," Maher said.
The market also digested economic data showing a sputtering economy.
US retail sales fell for the fifth straight month in November, dipping 1.80 per cent amid weak consumer sentiment and tight credit conditions in a deepening recession.
A separate report showed US wholesale prices fell 2.20 per cent in November led by plunging energy prices, in the fourth straight month of decline.
The falling prices and weak spending raised concerns about a deep recession and deflation that will pressure the Federal Reserve to cut interest rates close to zero.
The dollar in turn fell sharply, hitting a 13-year low against the yen.
European stock markets were down despite the European Union's announcement of a 200-billion-euro (US$260 billion) economic stimulus plan aimed at digging the bloc out of recession.
London's FTSE-100 closed down 2.47 per cent, in Paris the CAC 40 was down 2.80 per cent and the Frankfurt Dax lost 2.18 per cent.
In other markets, Brazil's Bovespa advanced 2.22 per cent and Canada's S&P/TSX added 1.22 per cent.