Stocks posted a modest gain Friday but ended flat for the week as the troubled auto makers teeter between bailout and bankruptcy.
The Dow Jones Industrial Average rose 64.59, or 0.8 percent, to close at 8629.68, and the S&P 500 index rose 0.7 percent. The Nasdaq jumped 2.2 percent as investors bet that the big piles of cash tech firms are sitting on will help them survive the slowdown.
"The expectation is that tech will be one of the first, not the last of the sectors to rebound," Michael James, senior trader at regional investment bank Wedbush Morgan, told Reuters.
For the week, the Dow ended down less than one-tenth of a percent, while the S&P gained 0.4 percent and the Nasdaq gained 2.1 percent.
The S&P is down about 40 percent for the year, but has pulled itself up by almost 19 percent after hitting an 11-year intraday low in November.
Friday's trading action was topsy-turvy: Stocks had opened lower, dragged down by the Senate's rejection of the $14 billion auto bailout and news of a $50 billion fraud scheme on Wall Street. Stocks pared their losses after the Treasury said it was willing to jump in to help prop up auto makersuntil Congress reconvenes and President Bush said he would consider using TARP funds to help bail out auto makers. Though, the market lost some ground after UAW President Ron Gettelfinger blamed the Senate GOP for the collapse of the deal.
The GOP wanted the UAW to bring U.S. auto-worker wages in-line with their overseas counterparts but the UAW has been resistant to make concessions on wages. Gettelfinger said comparing salaries of U.S. and overseas auto workers is like comparing apples and oranges, and called on the Treasury and Federal Reserve to help prevent the imminent collapse of auto makers.
General Motors shares were the biggest drag on the Dow, falling 4.4 percent after the company hired some of the biggest names in restructuring as it mulls a possible bankruptcy filing.
Ford shares rose 4.8 percent.
Asian stocks plummeted after the Senate rejected the bailout last night, with Japan's Nikkei index closing down more than 5.5 percent. European markets finished down more than 2 percent.
As if the auto drama wasn't enough, news that a top Wall Street broker has been accused of a $50 billion fraud schemesent a ripple of shock through the market.
Bernard Madoff, a former chairman of the Nasdaq Stock Market and a fixture in Wall Street trading for 50 years, was arrested and charged with running the fraudulent investment program, which he confessed to his sons, before they turned him in, was a "giant Ponzi scheme."
At $50 billion, some analysts point out that this is a bigger scandal than either Enron or Tyco and threatens the long-term confidence of investors.
Caterpillar slipped after Goldman Sachs slapped the construction-equipment maker's stock with a "sell" rating.
Boeing fell 2.7 percentafter the aerospace giant delayed its 787 Dreamliner for the fourth time.
Intel was the biggest gainer on the Dow, climbing 5.3 percent, as investors scooped up big-name techs.
UTX rose 3.7 percent after the manufacturer offered a reassuring outlook.
Financials shrugged off more bad bank news, which came from both sides of the Atlantic.
The negative headlines started Thursday when JPMorgan Chase CEO Jamie Dimon told CNBC that the banking giant has had a "terrible" November and December, sending its stock down 10 percent and prompting a selloff in financial shares. The stock rose 3.3 percent on Friday.
Also on Thursday, Bank of America said it plans to cut 35,000 jobsover three years after it completes its purchase of Merrill Lynch. Bank of America shares ticked higher.
In Europe, UK bank HBOS, which is being taken over by Lloyds TSB, said bad debts and other charges jumped to 8 billion pounds ($11.9 billion) this year as corporate and home loans soured.
Italian bank UniCredit, the country's second-largest, moved to bolster a key capital ratio by selling shares and amending a put/call accord on unit Bank Pekao shares.
In economic news, the University of Michigan and Reuters reported their gauge of consumer sentiment jumped to 59.1in a mid-December reading from 59.1 in November, helped by the drop in gasoline prices and the aggressive discounts by retailers for the holidays. Economists had expected the gauge to fall further.
Reflecting recent declines in sales, businesses cut their inventories by the biggest amount in five years in October.
Earlier, reports showed that producer prices fell 2.2 percent in November, the fourth straight month of decline amid a sharp drop in energy costs, and retail sales fell 1.8 percent to a seasonally adjusted $355.66 billion last month. Gasoline-station sales fell by a record 14.7 percent. Both PPI and retail sales came in roughly in-line with estimates and had little impact on the market.
For the week, energy stocks led the charge, up nearly 9 percent, as beaten-down oil prices gained 13 percent, finishing the week at $46.28 a barrel. Chesapeake Energy was the sector's biggest gainer, up 47 percent for the week, and Chevron had the most positive impact on the Dow, up 6 percent.
Financials were the biggest decliner this week, down 6 percent. XL Capital gave up the most, falling 56 percent.
On tap for next week, the Federal Reserve's two-day meeting starts Monday, the consumer-price index comes in on Tuesday, along with Housing starts and earnings from Goldman Sachs . Wednesday, it's Morgan Stanley's turn and Thursday brings a triple-tech earnings play: Oracle , Palm and RIMM . Friday is quadruple witching.