Stocks Rise Amid Hope For Automaker Rescue

Market Recovers From Morning Sell-Off After Treasury Says It's Prepared To Funnel Cash To Big 3

(CBS/AP)  Wall Street has set aside fears about a collapse of the U.S. auto industry, and closed higher in another sign that it's able to absorb troubling news.

The market recovered from the heavy selling at the start of the session following the Treasury Department's announcement it is prepared to funnel cash to the nation's Big Three automakers.

Wall Street has in recent weeks managed to react coolly to troubling economic and corporate news, and Friday was another instance of its resilience.

The Dow Jones industrials are ending up 64, or 0.75 percent, at 8,629. The tech-heavy Nasdaq composite index is ending with steeper gains.

General Motors Corp. and Chrysler LLC have said they could run out of cash within weeks without government help. Ford Motor Co., which would also be eligible for aid under the bill, has said it has enough cash to make it through next year.

The Treasury Department said it stands ready to "prevent an imminent failure" of the auto companies.

Other economic news gave investors pause. On Friday, the Commerce Department reported retail sales dropped by 1.8 percent last month, the fifth straight monthly drop. The weakness was led by a 2.8 percent fall in auto sales.

The Labor Department reported that wholesale prices dropped by 2.2 percent in November, marking the fourth straight monthly decline, reflecting weakness in prices for gasoline and other energy products.

Falling prices are giving consumers relief; however, a prolonged, widespread decline runs the risk of serious economic damage.

U.S. businesses also cut their inventories by the largest amount in five years, the government said Friday, a sign the recession will force further cuts in production.

The bankruptcy of any of the big American automakers would deal another blow to the world's largest economy, which is sliding deeper and deeper into recession.

Investors' concerns about job losses was further fueled by news late Thursday that Bank of America expected to cut as many as 35,000 jobs over the next three years, including some from investment bank Merrill Lynch & Co., which it agreed to buy in September.

The effect was felt overseas as Asian markets plunged Friday.

Japan's Nikkei 225 stock average tumbled 484.68 points, or 5.6 percent, to 8,235.87, and Hong Kong's Hang Seng index slid 5.9 percent to 14,692.79. South Korea's Kospi fell 4.4 percent.

The dollar sank to a 13-year low against the yen, dropping as low as 88.16 yen, and oil fell below $46 a barrel.

Bond prices were mixed Friday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.51 percent from 2.63 percent late Thursday. The yield on the three-month T-bill was unchanged from late Thursday at 0.02 percent. The bill has been in great demand because of the safety it offers investors.

The dollar rose against other major currencies, while gold prices fell.

Light, sweet crude fell $2.58 to $45.40 in electronic premarket trading on the New York Mercantile Exchange.

News about the rejected auto bailout sent the dollar as low as 88.16 yen - its lowest level since Aug. 2, 1995 - before it recovered some to 89.70 yen. That heaps more bad news on major exporters like Toyota and Sony, already reeling from waning global consumer demand.

Auto stocks from Bangkok to Tokyo plummeted. In Tokyo, Toyota Motor Co. dived 10.6 percent and Honda Motor Co. slid 12.9 percent. South Korea's Hyundai Motor Co. shed 9.3 percent and Kia Motors Corp. was off 9.1 percent. Thailand's AAPICO Hitech, an auto parts maker, fell 4.2 percent.

In a special three-part report for the CBS Evening News, correspondents John Blackstone in San Francisco, Celia Hatton in Beijing and Richard Roth in England reported on the international ripple effect of decreased U.S. retail demand.
When parents in California buy fewer toys, the Chinese factories which manufacture those toys - and the boxes they're sold in - close up. When the Chinese manufacture less boxes they need less raw material, and that means recycling companies in Britain are getting far less money for the "commodity" of their waste paper.

Mainland China's stock market fell as investors were discouraged by the lack of any major new initiatives to spur the economy following a top-level economic conference earlier in the week. The benchmark Shanghai Composite Index dropped 3.8 percent to 1,954.21.

[faletinme]

LMAO, look at this guy talking about....it''s Bush who is trying to save your loser industry!! HaHa.

As to the claim that the American worker is the most productive in the world, that is misleading. The American worker is so productive because of the capital investment that supports him. So, a typical union guy who pushes a button on a $100MM machine three times a day (between his 17 coffee breaks) will try to claim that hes "produced" the output of the machine. In fact, an automated button pusher could replace him for 1/10th the cost, except that the union wont allow it. Thus, that typical union worker is actually a drag on productivity.

But that doesn''t stop union guys from making their erroneous claim about their "productivity". Fortunately, most don''t believe them.

[faletinme]

Let''s set it straight. Auto workers need to make wage and benefit concessions until all of the premium they have extorted from the auto industry is removed. Auto workers should be given the same wages and benefits as comparable NON-UNION workers of equal skill. (For example: it takes less skill to screw on lugnuts all day thatn it does to work at McDonald''s. Thu the lugnut turner needs to make less than the kid at McDonalds).

The argument that the UAW has alread made concessions is specious. The fact is that UAW workers still make more than the average manual laborer. This discrepancy must vanish.

I''m thinking that we need one of these companies to go down so that employee of the other two will come to appreciate their jobs and tell the union to take a hike. Auto worker greed has killed the goose that laid the golden egg.

[irmcvet971]

Some of these Over Paid UAW workers need to take some kind of pay cut also and give a little bit back for this bail out.

The Airline Pilots all took a pay cut to help out the industry and so should the UAW''''''''s

Posted by MatrixRX2003 at 05:58 PM : Dec 12, 2008

It is no wonder you poor people put Bush in the White House! Do any of you have the education to read and understand what you have read? The UAW has made and was willing to discuss even more concessions to keep their Companies running... it''s just fact! You know you fascist should consider a few night classes.

[irmcvet971]

Ever stray away from your fishbowl ?

Every Company needs to be competetive.

Even in mighty America.

Believe it.

Posted by firehose12 at 08:26 PM : Dec 12, 2008

Can you or any other fascist give us ONE MONTH, just ONE, since we started down this "Trickle Down" path where the American Standard of Living has IMPROVED? Now you can''t use the Clinton Years, since as you have consistently told us, Trickle Down was discarded by Clinton. Before you start to look, I''ll tell you. NOT ONE MONTH. That''s right all you fascist. The American Workers have been and continue to be the MOST productive in the world yet NOT ONE MONTH has their standard of living improved under Fascist Rule. I''ll tell you this the next Fascist, Republican, who has the nerve to ask for my vote is going to get punched right in the MOUTH!!

[firehose12]

The autoworkers have been making wage and benefit concessions since the republicans and their big-business buddies started their rape of the American taxpayer (and subsequent funneling of the tax money to their wealthy friends) in 1980 with the election of Reagan. It''''s terrible that even with the suffering by the average American, republicans are still playing the game of giving big bailouts of tax money to banks and executives while withholding a far lesser amount of money to help US workers, who it just so happens are also taxpayers. It''''s time for republicans to quit their policy of childish fear of trade unions and start acting like true Americans instead of treasonous anti-American greedmongers. The modern republican is indeed the poorest example of man.


Posted by Strangeworld at 06:13 PM : Dec 12, 2008

Ever stray away from your fishbowl ?

Every Company needs to be competetive.

Even in mighty America.

Believe it.

[firehose12]

Some of these Over Paid UAW workers need to take some kind of pay cut also and give a little bit back for this bail out.

The Airline Pilots all took a pay cut to help out the industry and so should the UAW''''''''s


Posted by MatrixRX2003 at 05:58 PM : Dec 12, 2008


They will

Or

It will be

United Food Service Workers of America.

[strangeworld]

Republican credo..."Help the banker, screw the worker".

[strangeworld]

"The Airline Pilots all took a pay cut to help out the industry and so should the UAW''''''''s"

It''s evident by your comments that you are either ignorant of the recent history of the auto industry and those working for them or are deliberately trying to spread misinformation to the large group of people who spout BS without taking the time to inform themselves before they speak. Do a google search on the wage/benefit concessions given by not only auto workers but most workers in the American manufacturing sector since 1980. The problem here is not that some American workers are getting a decent living wage to produce American made products, but that republicans have been raping American industry and the US citizen for the last 28 years by funneling the wealth of the United States to their rich friends and campaign contributors. If you want things to straighten out in this country, keep voting out republicans in all elections from the local courthouse to federal positions. You need to ask yourself...do you want your tax money going to the rich people, or would you rather that it was used to keep the country and it''s economy running smoothly with decent jobs for the American people?

[strangeworld]

The autoworkers have been making wage and benefit concessions since the republicans and their big-business buddies started their rape of the American taxpayer (and subsequent funneling of the tax money to their wealthy friends) in 1980 with the election of Reagan. It''s terrible that even with the suffering by the average American, republicans are still playing the game of giving big bailouts of tax money to banks and executives while withholding a far lesser amount of money to help US workers, who it just so happens are also taxpayers. It''s time for republicans to quit their policy of childish fear of trade unions and start acting like true Americans instead of treasonous anti-American greedmongers. The modern republican is indeed the poorest example of man.

[matrixrx2003]

Some of these Over Paid UAW workers need to take some kind of pay cut also and give a little bit back for this bail out.

The Airline Pilots all took a pay cut to help out the industry and so should the UAW''''s

[matrixrx2003]

Some of these Over Paid UAW workers need to talk some kind of pay cut also and give a little bit back for this bail out.

The Airline Pilots all took a pay cut to help out the industry and so should the UAW''s

[mbourn2]

Stocks when up, all the rich peopel that DON''''T PAY TAX buy stock. When the BIG 3 (little 3) AND the UAW go BROKE, I hope the stock Market goes to 1. UAW SCUKS.


--------------------------------------------------------------------------------

Posted by hitoyou11

By rich do you mean all of those retired people and working class Americans who have their retirement savings in the market? Some people just don''t get it....

[mbourn2]

Has anyone noticed that this story has changed 3 times in the last couple of hours? It started out being about market anxiety due to failure of the auto bailout... then changed to stocks rise despite auto bailout failure.... now it is stocks rise amid hope for automaker rescue... I thought these were three different (inconsistent) stories until I saw something I posted earlier in the day before the title changed.... Is CBS on crack or what?

[hitoyou11]

Stocks when up, all the rich peopel that DON''T PAY TAX buy stock. When the BIG 3 (little 3) AND the UAW go BROKE, I hope the stock Market goes to 1. UAW SCUKS.

[generey]

The market recovered from the heavy selling at the start of the session following the Treasury Department''s announcement it is prepared to funnel cash to the nation''s Big Three automakers.

ROFLMAO!!!!!!!!! TOO FUNNY!!!

[obambaboon]

Once again dumbya and the d-crats are blindly forging ahead on another BAD bailout - this time the auto firms.

Once again, as with the terrible $700 Billion bailout to Paulson''s Wall Street pals that has failed totally, the only sanity is coming from the Republicans, who realize this bailout is also a waste of taxpayer money and just continues the socialist distortion of the US economy where the government is running everything and no company ever fails thanks to billions and billions and billions of taxpayer money. No wonder the stocks markets are rallying - businesses CAN''T LOSE.

The best alternative to the deeply-flawed d-crat bailout is Sen. Bob Corker''s plan for giving the holders of bonds issued by the auto companies 30 cents on the dollar to ease the companies%u2019 debt burden; immediately bringing workers%u2019 wages in line with foreign companies like Nissan and Volkswagen; and forcing the United Automobile Workers to eliminate payments to workers after their jobs have been eliminated. That will "bailout" the auto companies from some of their gross mismanagement, while eliminating the waste of billions in taxpayer money.

Once again the d-crats will try to grease their bad bill with additional billions in pork waste. And guess who will pay for all this expenditure?

Enough is enough. CITIZENS MUST STOP THE LUNACY OF THE D-CRATS!

[mbourn2]

I thought this story was about market anxiety due to the auto bailout not going through.... but the dow is up slightly... Whats up with that?

[praiseallah1]

WallStreetMarketNews.com reports on even more massive fraud just like Madoff''s occuring in the financial markets.

Go read the report for yourself at WallStreetMarketNews.com

[torva-2009]

And another blog re: REPUBLICANS = SCUM

"Republicans spent the last eight years like drunken sailors on their first shore leave after years at sea. They wantonly drained the treasury of billions and billions of dollars on harebrained schemes to induce "birthpangs of democracy" around the world, chasing phantom enemies and enriching their defense contractor contributors. They created a lobbying culture so corrupt it finally collapsed of its own weight. They deregulated the financial industry so thoroughly that it created an elaborate ponzi scheme that has just about destroyed the world economy.

They have no standing to lecture anyone about responsibility, fiscal or otherwise, and no right to obstruct the cure for the problem they created."

Digby commenting at her blog on senate republicans blocking the Big Three bailout amid lectures from them on "fiscal responsibility" and a demand that American auto workers essentially abandon their union even though they agreed to steep pay and benefit cuts to make the bailout work.

[torva-2009]

Other observations of the GOP''s last stand!

there''s this from Josh Marshall:

"Senate Republicans are following this course for three key reasons %u2014 first is payback against a major industrial union; second is payback against states like Michigan and Ohio who have been moving away from the GOP; third is the desire to advantage Japanese auto manufacturers who disproportionately do business in their southern states."

And if, by acting as agents on behalf of foreign interests, the activities of these southern senators undermines the economy of The United States of America then that is treason, plain and simple.

And this is from Thers in a post titled Conservatism = Nihilism :