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Shares rebound with confidence boost from GE
2008-12-02
NEW YORK - Stocks snapped back on Tuesday after a pledge by General Electric (GE.N), a global bellwether, to leave its dividend intact in a fragile economy sparked optimism. Financial stocks recovered a sizable chunk of Monday's record loss after the Federal Reserve extended several emergency measures integral to stabilizing banks during the credit crisis, Reuters reported. The move by the U.S. central bank came a day after Fed Chairman Ben Bernanke emphasized that policy-makers were determined to stabilize the economy and financial markets. The S&P financial index (.GSPF) rose nearly 8 percent, as Citigroup (C.N) and Bank of America (BAC.N) both jumped nearly 12 percent. But the spotlight was on conglomerate GE, whose shares surged 13.6 percent to $17.61 after the maker of goods from jet engines to lightbulbs said it plans to scale back its sizable finance arm and cut jobs as the U.S. recession digs deeper, while maintaining its dividend. "There's been concern about GE's defending its triple-A credit rating at its financing unit. ... The company is taking steps to bolster that unit, which will help protect its dividend," said Brian Gendreau, an investment strategist in New York for ING Investment Management Americas. "This is helping to pull the market higher." The Dow Jones industrial average (.DJI) gained 270.00 points, or 3.31 percent, at 8,419.09. The Standard & Poor's 500 Index (.SPX) rose 32.60 points, or 3.99 percent, at 848.81. The Nasdaq Composite Index (.IXIC) added 51.73 points, or 3.70 percent, at 1,449.80. Energy stocks, currently the cheapest S&P sector in relation to earnings, also drove the Dow higher after losses on Monday. Chevron (CVX.N) gained almost 5 percent to $75.54 while Exxon Mobil (XOM.N) climbed over 4 percent to $77.61. Stocks pared gains and the Dow briefly turned negative after General Motors (GM.N) reported U.S. vehicle sales declined by 41 percent in November. The carmaker recovered to end up almost 6 percent at $4.85, while Ford Motor Co (F.N) rose 6 percent to $2.70. Executives of the big three U.S. automakers, including Chrysler, are due to present Washington with their plans to justify a $25 billion bailout as worries about possible bankruptcy persist. As part of its plan, Ford said it expected its overall and North American automotive business to break even or be profitable in 2011 and did not anticipate a liquidity crisis, barring a bankruptcy of one of its domestic rivals. Even with the broad gains, worries about the deepening economic slump caused some caution, as diversified manufacturer 3M Co (MMM.N) fell over 2.4 percent to $60.86 after a brokerage downgrade. Advancers outnumbered decliners by nearly 3 to 1 on the New York Stock Exchange, while the ratio of advancers was more than 2 to 1 to decliners on the Nasdaq. Volume totaled about 1.62 billion on the New York Stock Exchange, while about 2.14 billion shares changed hands on the Nasdaq.
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