U.S. Stocks Poised For Mixed Weekly Results After Auto Rescue

NEW YORK (MarketWatch) -- U.S. stocks on Friday headed towards mixed results for the week after the White House said it would loan the ailing auto industry $17.4 billion to prevent a "disorderly liquidation."

"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 likely curbing any sharp moves higher is the expirations of options today, 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. .

After climbing about 200 points, the Dow Jones Industrial Average was lately up 2.71 points at 8,607.7, with 16 of its 30 components trading higher.

The latest action leaves the blue-chip index poised for a 0.3% decline on the week.

General Motors Corp. led the blue-chip gains, up 10.9%.

Off the Dow, shares of Ford Motor Co. fell 2.1%.

Citigroup Inc. proved the Dow's biggest laggard, its shares off more than 5%.

The S&P 500 advanced 3.87 points to 889.15, with energy, information technology and financials pacing the gains that stretched to include all but one of the index's 10 industry groups.

The S&P is currently 1.1% ahead of where it stood at last Friday's close.

Standouts included Southwestern Energy Co. , up 11.3%.

The technology-laden Nasdaq Composite rose 15.06 points to 1,567.43, readying it for a 1.7% weekly decline. .

Volume on the New York Stock Exchange topped 1.5 billion, with advancing issues running ahead of those declining about 5 to 3. On the Nasdaq, 852 million shares traded hands, and advancers topped decliners roughly 4 to 3.

February crude-oil futures rose 69 cents to end at $42.36 a barrel, while the just-expired January contract closed $2.35 lower at 33.87 a barrel on the New York Stock Exchange.

"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 Cardillo.

The banking sector was also expected to be 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 5.5% after the paper and building products giant cut its quarterly dividend and costs in response to a slowdown in business.

Shares of Research In Motion jumped 11.3% 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&P500 Index fell 19.08 points and the Nasdaq Composite Index gave up 26.94 points.

By Kate Gibson