US stocks climbed on Tuesday after the government expanded its bailout of the auto industry, bolstering hopes that lawmakers could curb the severity of the year-old recession. The Bush Administration said late Monday it would extend an additional $1 billion loan to General Motors Corp and take a $5 billion stake in the automaker's financing arm, GMAC, in the latest move to ease the credit crisis.
On Tuesday, GMAC announced easier financing terms for car and truck buyers. Shares of both GM and rival Ford Motor Corp gained on the news. The measure is "helping soften the blow related to the economic contraction," said Jason Ronovech, portfolio manager for Paradigm Capital Management Inc based in Albany, New York.
"It provides hope that the government willing to do whatever it takes to help the economy." The Dow Jones industrial average gained 117.72 points, or 1.39 percent, at 8,601.65. The Standard & Poor's 500 Index added 11.87 points, or 1.37 percent, at 881.29. The Nasdaq Composite Index rose 24.64 points, or 1.63 percent, at 1,534.96.
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