Stocks rise after two-day sell-off
Stocks rallied Friday after two days of heavy losses despite downbeat data on unemployment and dire third-quarter reports from the two biggest Detroit automakers.
The major indexes rose more than 2%, including the Dow Jones industrial average, which rose 248.02 points, or 2.9%, to 8,943.81 in light trading.
For the week, the Dow and broader benchmarks such as the Standard & Poor’s 500 index lost about 4% after surging 10% or more last week.
Stocks briefly retreated late in Friday’s session after President-elect Barack Obama reiterated at a news conference that a great deal of hard work would be needed to restore the U.S. economy. The Democratic senator from Illinois, who will be inaugurated as president in January, said he would work to support an economic stimulus plan and seek ideas to help the auto industry.
The market fluctuated after Obama’s comments before righting itself to close near its highest levels of the day.
The S&P; 500 index gained 26.11 points, or 2.9%, to 930.99, and the Nasdaq composite index rose 38.70 points, or 2.4%, to 1,647.40. The Russell 2,000 small-cap index rose 2%.
Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange.
Friday’s economic and corporate news reminded the market that the nation could be in for a deep and protracted recession. The Labor Department said U.S. employers cut 240,000 jobs in October, sending the unemployment rate to a 14-year high of 6.5%. Analysts had expected employers to cut 200,000 jobs and for the unemployment rate to rise to 6.3%.
Meanwhile, Ford Motor reported a $129-million third-quarter loss and announced plans to cut more than 2,000 jobs. General Motors said it lost $2.5 billion in the quarter and warned that it could run out of cash in 2009. GM also said it had suspended talks to buy Chrysler.
Shares of GM fell 44 cents, or 9.2%, to $4.36, but Ford rose 4 cents, or 2%, to $2.02.
Although the day’s news was worse than expected, some investors were relieved that the reports weren’t more grim.
“We’re coming off of a very oversold market that had already braced itself for bad news out of Detroit and certainly bad economic data in terms of the labor report,” said Peter Cardillo, chief market economist at Avalon Partners Inc. in New York.
In the troubled credit markets, yields on short-term government debt remained unusually low, signaling a continuing apprehension about riskier assets such as stocks and corporate debt. The three-month Treasury bill’s yield slipped to 0.28% from 0.3% late Thursday.
But bank-to-bank lending rates fell again, suggesting banks are becoming more willing to lend to one another -- and perhaps to businesses and consumers.
In other market highlights:
* For the week, the Dow fell 4.1%, the S&P; 500 index dropped 3.9%, the Nasdaq slid 4.3% and the Russell fell 5.9%.
* The dollar lost ground against most other major currencies, while gold prices fell. Oil futures rose 27 cents to $61.04 a barrel after falling sharply during the week.
* Overseas, key stock indexes fell 3.6% in Japan and 3.3% in Hong Kong, but rose 2.2% in Britain, 2.6% in Germany and 2.4% in France.