The S&P 500 and Nasdaq rose on Friday after the US government said it would throw a $17.4 billion lifeline to automakers grappling with falling consumer demand. But the Dow ended lower, pulled down by another fall in energy shares, including Chevron and Exxon Mobil, as oil sank for the sixth day in a row on fears the anaemic economy will swamp demand.
"It's relief for the markets," said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York, in reference to the auto sector's bailout. "There was a feeling it was on the way. It is being dealt with and not in a way that opens up the pocketbook and says, 'Take what you need.'"
Initial optimism over the government's bridge loan to the automakers, which sent stocks up as much as 2 percent, faded as investors digested terms of the bailout that give them a relatively short period of time to repair their problems.
The Dow Jones industrial average slipped 25.88 points, or 0.30 percent, to end at 8,579.11. But the Standard & Poor's 500 Index rose 2.60 points, or 0.29 percent, to 887.88. And the Nasdaq Composite Index added 11.95 points, or 0.77 percent, to close at 1,564.32.
Over the last three days, the Dow has fallen 3.9 percent. For the month so far, the Dow is down 2.8 percent. For the week, the Dow fell 0.7 percent, while the S&P 500 rose 0.8 percent and the Nasdaq gained 1.5 percent. The Nasdaq was the best-performing index, with help from Oracle Corp and Research in Motion, after the companies reported better-than-expected earnings late Thursday.
Friday marked the end of the convergence known as quadruple witching, in which settlement and expiration of four different types of futures and options contracts happen in a two-day period. This can add to volatility, but on Friday, that was not the case.
The Chicago Board Options Exchange Volatility Index, or VIX, which also is Wall Street's favourite fear gauge, fell 5.09 percent to end at 44.93. In the energy sector, Exxon Mobil slumped 2.6 percent to $75.02, while Chevron fell 3 percent to $70.85. Oil fell to $33.87 a barrel, its lowest settlement since February 10, 2004.
Retailers' shares also weighed on the market, as the S&P Retailers Index fell 1.1 percent while heavy snow and inclement weather across large parts of the United States threatened to damage sales during the last weekend of what is expected to be a weak holiday shopping season.
A drop in retailers' stocks, including Target and JC Penney Co Inc, helped curtail the S&P's earlier gains. Target's stock slid 2.8 percent to $34.42 and JC Penney shares lost 4 percent to $19.92, both on the New York Stock Exchange. Shares of General Motors Corp surged nearly 23 percent to $4.49 after US President George W. Bush said it would be irresponsible to let the companies go bankrupt in a time of economic crisis.
Investors had fretted about the wide-reaching ramifications of a potential failure of one of Detroit's big automakers. The government loans would be called back if they cannot restructure enough to ensure their survival. Shares of rival Ford Motor Corp tacked on 3.9 percent to $2.95 on the New York Stock Exchange. Among the Nasdaq's major advancers, the US-listed shares of BlackBerry maker Research in Motion jumped 11.4 percent to $42.83.
In addition to posting better-than-expected third-quarter results after the close on Thursday, the Canadian company gave an optimistic outlook for its fourth quarter. Oracle's stock climbed 7 percent to $17.78 and ranked as the No 1 boost to the NASDAQ 100 a day after reporting second-quarter earnings that were in line with estimates, while posting a sales decline that was less than feared.
Volume was high on the New York Stock Exchange, with about 2.42 billion shares changing hands, well above last year's estimated daily average of roughly 1.90 billion. On the NASDAQ, about 2.74 billion shares traded, sharply exceeding last year's daily average of 2.17 billion. Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 5 to 3, while on the NASDAQ, the ratio was about even.
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