NEW YORK - Wall Street staged a big advance in the next-to-last session of 2008 yesterday after Washington's latest lifeline to the auto industry bolstered hopes that the government would do whatever was necessary to shorten the recession.
Investors found solace in news that General Motors Corp.'s troubled financing arm received $5 billion of financing. The Treasury Department said late Monday that it would provide the money to GMAC Financial Services from the $700 billion bank-rescue program.
The injection is on top of the $17.4 billion in loans the Bush administration agreed to provide Dec. 19 to the auto industry. GMAC said yesterday that it would immediately resume lending to certain customers it had previously said were too great a risk for auto loans because of tight credit markets.
"This is trying to slow down the economic train wreck," said Jack Ablin, chief investment officer at Harris Private Bank. "Investors are taking a step back and realizing that this will enable auto buyers to finance their cars and add liquidity to the market."
Wall Street got another disappointing reading about the mood of Americans after the Conference Board reported its Consumer Confidence Index dropped to a record low. The trade group reported the index's reading fell to a 38 in December from a revised 44.7 last month, well below the expectation of 45 economists surveyed by Thomson Reuters.
Investors were well-prepared for a report that retailers had their worst holiday season in years. The International Council of Shopping Centers said yesterday that weekly same-store sales, those from stores open a year or more, dropped 1.5 percent last week at the 40 retailers it polls.
The Dow Jones industrial average rose 184.46, or 2.17 percent, to 8,668.39. The Standard & Poor's 500 index rose 21.22, or 2.44 percent, to 890.64; the Nasdaq composite index added 40.38, or 2.67 percent, to 1,550.70.
Light, sweet crude fell 99 cents to close at $39.03 on the New York Mercantile Exchange. Oil prices rose Monday as investors worried that fighting between Israel and Hamas in Gaza would disrupt oil shipments.
In corporate news, shares of GM rose 20 cents, or 5.56 percent, to $3.80 after GMAC was given government financing. GM owns 49 percent of GMAC, while private-equity firm Cerberus Capital Management L.P. holds the remainder.
General Motors also said it was offering financing as low as zero percent over the next week for several 2008 and 2009 models in a big year-end sales push.
The Russell 2000 index of smaller companies rose 16.62, or 3.57 percent, to 482.77.
Japan's Nikkei stock average rose 1.28 percent in the final session of the year, ending 2008 with a loss of 42 percent. Markets in Japan are closed for a holiday today. Britain's FTSE 100 rose 1.70 percent, Germany's DAX index rose 2.24 percent, and France's CAC-40 rose 2.76 percent.