Stocks opened higher Thursday amid hopes that a bailout will get passed today.
If a deal gets passed, "It bides us time," Warren Meyers of Walter J. Dowd, told CNBC. "It doesn't solve the underlying problems but it gives us time to look at them and try and solve them ... that will slowly build confidence" in the market, he said.
However, gains were curbed by worries about General Electric's lowered outlook and misses in two key economic stats.
General Electric was the biggest drag on the Dow after the economic bellwether cut its earnings outlook for the third-quarter and full year and halted its buyback plans because of turmoil in the financial services markets. (Track the Dow winners losers.)
Jobless claims jumped by 32,000last week, more than the 20K jump expected. Orders for durable goods, items such as cars and refrigerators that are meant to last three years or more, fell by 4.5 percent, nearly three times the 1.6-percent drop expected. A lot of that was due to a drop in demand in the volatile transportation sector, which fell 3 percent, when economists had expected a 0.5-percent drop.
More dismal statistics for the housing sector: New-home sales plunged 11.5 percent to a 17-year low as prices hit a four-year low.
But the market shrugged off the triple miss on the economic front, instead pinning its hopes on Congress.
The bailout bill is "almost a done deal," U.S. Representative Paul Kanjorski told CNBC on Thursday.
"I'm more optimistic this morning than I've ever been," Kanjorski, a Democrat from Pennsylvania who serves on the House Financial Service Committee and is chairman of a subcommittee on capital markets, said.
Meanwhile, President George W. Bush called an emergency meeting to discuss to the bailout plan as Congress looked closer to approving the controversial and highly politicized market intervention.
The old saying "cash is king" became fashionable again as experts warned in times like these investors should take refuge in safety.
Stocks had meandered on Wednesday as uncertainty about the deal and whether it would be approved this week or held up by political wrangling. Meanwhile, interbank lending remained extremely strained as banks sought to hold onto cash reserves.
UBS shares surged about 5 percent on chatter that HSBC is prepared to make a bid on the Swiss bank, even though sources have told Reuters otherwise.
On the earnings front, credit-card giant Discover Financial reported that its profit fell 11 percent as its provisions for bad loans rose sharply.
Drugstore-chain Rite Aid reported its loss nearly tripled as the Eckerd chain it bought in 2007 continued to struggle. Rite Aid also announced that it has hired two former Pathmark executives and three top Rite Aid execs are leaving the company.
The Chicago Federal Reserve and European Central Bank conference on credit market turmoil will be ongoing throughout the day, with Charles Evans, Kevin Warsh, Charles Plosser all set to make appearances. And Dallas Fed President Richard Fisher will speak on market turbulence at 7:30 pm.
STILL TO COME:
THURSDAY: Parade of Fed speakers; natural-gas inventories; Kansas City Fed manuf. report; Earnings from Research In Motion after the bell
FRIDAY: St. Louis Fed pres. speaks; Last look at Q2 GDP, corporate profits; consumer sentiment; Earnings from KBHome
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