NEW YORK - Wall Street made an impressive show of resilience yesterday, rebounding from an early sell-off to end higher after the government said it would assist troubled U.S. automakers.
The market, which just a week earlier withstood a terrible November employment report, managed its advance after the Treasury Department said it was prepared to assist the nation's Big Three automakers. The Dow Jones industrial average had fallen more than 200 points in very early trading when it appeared that the Senate had killed a $14 billion bailout package for the companies.
"It's hard to say if this is indeed the beginning of a recovery, but it could be," said Matt King, chief investment officer of Bell Investment Advisors. "It seems like the past few Fridays we've ended the week on a positive note."
Many analysts believe Wall Street is growing more confident that the government's steps to stimulate the economy, including its $700 billion bank bailout program, will work.
General Motors Corp. and Chrysler L.L.C. have said they could run out of cash within weeks without government help. Ford Motor Co., which would also be eligible for aid under the bill, has said it has enough cash to make it through next year.
Some of the market's moves yesterday were with an eye toward next week's Federal Reserve decision on interest rates. The two-day meeting begins Monday. The Fed is widely expected to lower its key federal funds rate half a percentage point to 0.5 percent, another step by the government toward lifting the economy out of recession.
The Dow rose 64.59, or 0.75 percent, to 8,629.68. The Dow tumbled 196 points Thursday as worries intensified that the auto bill would stall in the Senate. The S&P 500 index rose 6.14, or 0.70 percent, to 879.73, and the Nasdaq rose 32.84, or 2.18 percent, to 1,540.72.
The Russell 2000 index of smaller companies rose 17.22, or 3.82 percent, to 468.43 yesterday.
The day's economic news showed continuing weakness, but, as it has done with a steady stream of downbeat data in recent weeks, the market shrugged.
The Labor Department said wholesale prices sank in November for the fourth straight month, raising deflation fears.
Businesses also slashed inventories in October by the largest amount in five years.
Next week's readings include the Consumer Price Index and housing starts for November.
The week also brings quarterly results from Wall Street's brokerages, which have been badly hurt by the stock market's tumble from its October 2007 highs, the slowdown in the economy, and the freeze-up in the credit markets.
GM ended down 18 cents, or 4.4 percent, at $3.94 after declining as much as 37 percent in the session. Ford rose 14 cents, or 4.8 percent, to $3.04. Chrysler isn't publicly traded.