U.S. Stocks Mostly Up For The Week After Auto Rescue

NEW YORK (MarketWatch) -- U.S. stocks on Friday pulled mostly higher for another week, as investors drew a sigh of relief after the White House stepped in to rescue automakers, offsetting worries that an industry breakdown would deepen the recession.

The potential demise of the auto industry was "the largest element of uncertainty hanging over the market. As long as unemployment doesn't creep up drastically, as long as it stays below 7%, we can recover from there," said Tim Speiss, head of wealth management division at Eisner LLP.

"If you're a homeowner, it now costs less to heat your home during the winter and you have an opportunity to refinance, two very good things," said Spies, who adds people are overly "focused on what they lost in their 401k plans that they're not going to need for another 15 years instead of thinking about how they can refinance their home and save on heating bills."

After climbing about 200 points, the Dow Jones Industrial Average closed at 8,579.11, off 25.88 points, or 0.3%, to finish the week down 0.3%.

Seventeen of the Dow's 30 components finished in the red, with Citigroup Inc. proving the Dow's biggest laggard, its shares off more than 5.5%.

General Motors Corp. led blue-chip gains, up 22.7% on news of the rescue package.

Off the Dow, shares of Ford Motor Co. gained 3.9%, although it won't participate in the package at this time.

The S&P 500 advanced 2.32 points, or 0.3%, to end at 887.6, up 0.9% from a week ago.

Energy, information technology and financials paced the gains that stretched to include all but two of the index's 10 industry groups.

Standouts included Southwestern Energy Co. , up 11.1%.

The technology-laden Nasdaq Composite rose 11.95 points, or 0.8%, to 1,564.32, giving it a 1.5% weekly gain. . .

Volume on the New York Stock Exchange topped 2.4 billion, with advancing issues running ahead of those declining about 5 to 3. On the Nasdaq, 1.3 billion shares traded hands, and advancers and decliners ran almost even.

Crude-oil investors dumped the expiring January contract, sending prices to just under $34 a barrel.

"One of the reasons why oil has been pressured over the past couple of days is the fact you have their options expiring as well. Hedge funds don't want to carry on books next year," said Peter Cardillo, chief market economist at Avalon Partners.

"Allowing the U.S. auto industry to collapse is not a responsible course of action," said President Bush in a nationally televised address Friday morning, when he unveiled the White House's plan to bail out the troubled Detroit industry. .

"The market's up on the rescue plan for the auto industry and I think this certainly is positive in terms of psychology. Of course there is still a lot of work that has to be done, but it is a relief," said Peter Cardillo, chief market strategist at Avalon Partners.

But Friday's expirations of options were likely curbing any sharp moves higher, Cardillo said. "There's a tendency where traders can hold back certain stocks in indices, so they don't have to run to cover or vice versa. It's a technical issue."

Speaking in New York Thursday night, Treasury Secretary Henry Paulson said he felt a rescue of the ailing car industry should not have been left to the White House. "I did not want to be making this argument -- I felt something should be done by Congress," Paulson said.

Yet in light of the fragile state of the economy, "it would seem to be an imprudent risk" to allow the industry to collapse, he said. .

The banking sector was also in focus after Standard & Poor's cut its credit rating or outlook on 12 major international firms.

U.S. firms that were downgraded or had a banking division downgraded include Bank of America , Citigroup , Goldman Sachs , J.P. Morgan , Morgan Stanley and Wells Fargo .

Shares of Weyerhaeuser Co. fell 9.5% after thepaper and building products giant cut its quarterly dividend and costs in response to a slowdown in business.

Shares of Research In Motion jumped 11.4% after the smart phone maker surprised investors with a better-than-expected forecast for the fourth quarter. .

Oracle Corp. shares also advanced after the software giant posted a small drop in second-quarter profits that nonetheless cheered investors who had worried about a sharper slowdown given the global recession. .

U.S. stocks ended lower Thursday, with energy-related shares pacing losses after the price of crude oil fell to a four-year low. The Dow Jones Industrial Average lost 219.35 points, the S&P 500 Index fell 19.08 points and the Nasdaq Composite Index gave up 26.94 points.

By Kate Gibson