GM sales report reverses Dow slide
Stocks rebounded from a rough June with moderate gains Tuesday as better-than-forecast sales at General Motors and a surprisingly upbeat report on manufacturing offset concerns triggered by a further rise in oil prices.
GM led the Dow Jones industrial average’s recovery from a nearly 167-point drop early in the day that had sent the blue-chip gauge well into bear-market territory.
The Dow and the Standard & Poor’s 500 index each swung between positive and negative territory at least 20 times.
Also helping stocks was a report from the Institute for Supply Management showing its factory index rising to 50.2 this month from 49.6 in May, topping economists’ forecasts.
A reading above 50 is said to indicate an expansion of the manufacturing sector; below 50 suggests contraction.
The Dow climbed 32.25 points, or 0.3%, to 11,382.26.
The Standard & Poor’s 500 index added 4.91 points, or 0.4%, to 1,284.91.
The Nasdaq composite index advanced 11.99 points, or 0.5%, to 2,304.97.
The Russell 2,000 index of smaller companies rose 1.93 points, or 0.3%, to 691.59.
Declining issues led advancers by about 2 to 1 on the New York Stock Exchange.
The Dow’s gain put it down 19.6% from its record high set in October, less than the 20% decline that traditionally marks a bear market.
The S&P; 500 has lost 18% since its October peak. In June, the S&P; 500 tumbled 8.6% and the Dow lost 7.4%.
Government bond yields bounced up and down along with stocks. The yield on the benchmark 10-year Treasury note rose to 4% from 3.97% late Monday.
Oil futures shot above $143 a barrel before pulling back to finish up 97 cents at a record close of $140.97 in New York trading. The International Energy Agency said supplies of crude might not keep up with demand through 2013, and ABC News reported Israel was increasingly likely to attack Iran this year.
GM rose 25 cents, or 2.2%, to $11.75. The automaker’s vehicle sales fell 19% in June from a year earlier, a smaller drop than analysts had estimated. But at Ford Motor, sales plummeted 29% and its stock slid 10 cents, or 2.1%, to $4.71.
Financial stocks in the S&P; 500 climbed 1% as a group after three days of declines.
CIT Group soared $2.02, or 29.7%, to $8.83 after the business lender agreed to sell its home-mortgage unit to Lone Star Funds for $1.5 billion. The company said it would record a $2-billion loss on the sale. In addition, CIT is selling, also at a loss, its portfolio of manufactured-housing loans for about $300 million. The transactions will remove CIT from consumer lending.
Other mortgage-related companies also rallied. MGIC Investment, the largest U.S. mortgage insurer, rose 43 cents, or 7%, to $6.54. Washington Mutual, the country’s No. 1 savings and loan, gained 32 cents, or 6.5%, to $5.25.
Lehman Bros. Holdings advanced $1.15, or 5.8%, to $20.96. Morgan Stanley rated the stock “overweight,” citing the investment bank’s “solid liquidity and capital footing.” The stock, which sank $2.44 on Monday, is down 68% this year.
Mortgage lender IndyMac Bancorp rose 3 cents, or 4.8%, to 63 cents after plunging Monday. Concerns about the Pasadena-based company’s financial health have led depositors to line up at some branches in recent days to withdraw money. IndyMac said late Tuesday that its customer traffic remained “elevated.”
American Express rallied $2.35, or 6.2%, to $40.02. UBS upgraded the stock to “neutral” from “sell” after it fell Monday to its lowest level since 2003.
Legg Mason slumped $2.32, or 5.3%, to $41.25, a five-year low, after the asset manager said agreements to support its money funds would cut earnings. Buckingham Research Group downgraded Legg Mason to “neutral” from “strong buy.”
Elsewhere, European stock markets tumbled. Key indexes fell 2.6% in Britain, 1.6% in Germany and 2.1% in France. Shares declined 0.1% in Japan.
