Stocks Rally as Oil Regains, Tech Surges
Wall Street was enjoying the fruits of a broad-based rally Wednesday that lifted the shares of chip makers and energy producers, though auto makers fell on signs of partisan divide over a bailout plan.
Major indexes were up more than 1 percent each but off their highs as oil prices regained their footing and bargain hunters stepped in to pick up stocks battered by Tuesday's selloff.
The market shrugged off a climate of bad news that included more companies predicting tough times ahead and a tumultuous mood on Capitol Hill over the auto bailout and government liquidity programs.
The Big Three automakers appeared to have secured a $15 billion bridging loan after the White House and congressional Democrats reached an agreement in principle after weeks of wrangling, according to officials.
A so-called 'Car Czar' would be put in place to negotiate a restructuring of General Motors, Ford and Chrysler by March 31.
But Sen. Richard Shelby said he wanted to slow down the plan to rescue the companies, and the shares of Ford and GM subsequently dropped, as did the broader market.
"There's a lack of unity as to whether something will or will not happen on the auto bailout, and that's partly why the market lost some ground too," Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles, told Reuters.
Commodity stocks led the gainers, with Anglogold Ashanti surging on a boost in gold prices that sent the metal to $800.
Bank moved mostly lower as well, but major energy producers recouped losses after oil prices briefly turned flat.
On the major indexes, Alcoa led Dow gainers while Amylin Pharmaceutical pushed the Nasdaq tech gauge.
Consol Energy led a slew of companies in the energy industry higher on the S&P 500, though the trade temporarily lost some of its luster following a report showing crude supplies higher than anticipated. Oil was nearly $4 a barrel higher by mid-day, pushing up shares for Chevron as well.
American Express was a huge loser on the Dow as credit card companies continued to struggle.
There was still a bounty of bad news to temper enthusiasm, but the broader market movements ignored the signs of gloom.
Video-game maker Electronic Arts was the latest company to slash its earnings outlook, joining FedEx and Texas Instruments in resetting its targets lower.
Eastman Kodak shares also were getting pummeled after the company pulled its forecast and said it will try cutting costs by eliminating management salary increases next year.
And Nortel Networks , whose stock has lost almost all 94 percent of its value since September, is exploring bankruptcy, according to a report in the Wall Street Journal.
"I guess a lot of people feel all the bad news is built in," Dave Rovelli, managing director of US equities for Canaccord Adams, said on CNBC. "It's nice to see these stocks rally on bad news."
Also in financial news, insurance giant American International Group owes around $10 billion to other financial services firms for trades that have gone sour, according to a report from the Wall Street Journal citing sources familiar with the situation.
The report said that the trades would not be covered by the terms of the current $150 billion U.S. government rescue package.
In economic news, mortgage applications eased after last week's record gains, dipping 7.1 percent after doubling the week before after a huge tumble in interest rates. At the same time, Wells Fargo CEO John Stumpf said he is seeing signs that real estate prices may be bottoming. Stumpf made the remarks at a Goldman Sachs-sponsored investment conference during which he also said employment will now be the economy's biggest obstacle.
Market internals were strongly positive, with gainers beating losers more than 3 to 1 on the New York Stock Exchange, where volume was an anemic 500 million shares.