Wall St ekes out gains in choppy trade

 

NEW YORK: US stocks made modest gains yesterday as investors swung between Hewlett-Packard’s upbeat outlook and the depressing economic climate.

The Dow Jones Industrial Average rose 151.71 points (1.83 per cent) to finish at 8,424.75 and the tech-heavy Nasdaq was virtually flat, up 1.22 points (0.08 per cent) at 1,483.27.

The broad Standard & Poor’s 500 index advanced 8.36 points (0.98 per cent) to end at 859.11.

It was another volatile day on Wall Street amid the global financial crisis, with stocks plummeting briefly in afternoon trade before an 11th-hour rebound.

“Concerns about the economy and the stock market’s continued poor showing weighed heavily on sentiment,” said Patrick O’Hare, analyst at Briefing.com.

Gregori Volokhine, analyst at Meeschaert New York, said “we’re waiting for things to stabilise — every day there’s a hope,” commenting on the morning rally.

“For every good news there are 10 bad ones,” he added.

The market focused on testimony by Treasury Secretary Henry Paulson, Federal Reserve chairman Ben Bernanke and Federal Deposit Insurance Corporation chairwoman Sheila Bair before the House of Representatives Financial Services Committee.

The three officials discussed the US$700 billion Troubled Asset Relief Program (TARP) authorised by Congress last month for the financial sector.

Paulson was grilled over the implementation of the plan as lawmakers called for some of the funds to be used to help shore up the economy.

“The purpose of the financial rescue legislation was to stabilise our financial system and to strengthen it. It is not a panacea for all our economic difficulties,” Paulson told lawmakers, reiterating opposition to using the funds for the ailing auto industry.

The heads of the Big Three automakers — General Motors, Ford and Chrysler — were to plead their case later yesterday before a Senate panel.

A key indicator of wholesale prices — the Labour Department’s producer price index — plunged a record 2.8 per cent in October, the steepest fall since the department began reporting the data in 1947.

“Inflation is yesterday’s problem. Commodity prices have plunged and are driving producer prices down,” said Nigel Gault, chief US economist at IHS Global Insight.

“It is remarkable that in just a few months fears have switched from inflation to deflation, a testament to how suddenly the global economy’s expansion has turned into recession,” Gault said.

Among stocks in focus, Hewlett-Packard leapt 14.49 per cent to US$33.59 after the computer maker issued upside earnings guidance.

“The outlook comes as a refreshing dose of good news as the trend of disappointing quarterly results and downwardly revised outlooks from various businesses have added to investors’ gloom,” analysts at Briefing.com wrote in a client note.

Intel rose 0.85 per cent to US$13.11 after launching what it called the world’s fastest computer chip.

Yahoo soared 8.65 per cent to US$11.55. The company said co-founder Jerry Yang would step down as chief executive, a move analysts said could pave the way for Microsoft to make another takeover offer.

Struggling bank Citigroup was the Dow’s worst performer, down 5.96 per cent to US$8.36.

Ford fell 2.33 per cent to US$1.68 after announcing it would cut its stake in Japanese partner Mazda Motor Corp by 20 per cent to raise US$540 million.

GM plunged 2.83 per cent to US$3.09, a day after the automaker said it sold its stake in Suzuki. - AFP