Stocks Head Toward Third Session of Gains

By: AP
By: AP

NEW YORK – Wall Street pointed to a third straight session of gains on Tuesday as investors held on to hopes that the government will reach an agreement to rescue U.S. automakers.

Negotiators worked through the night to come up with a $15 billion bailout for General Motors Corp. and Chrysler LLC. A deal might occur as early as Wednesday.

The proposal being worked on reportedly would give the government an ownership stake in the automakers. The market is concerned that a collapse of GM, Chrysler or Ford Motor Co. would trigger massive job losses, and further stymie the government's efforts to lift the U.S. out of a recession.

The pending deal helped alleviate investor anxiety about corporate earnings.

FedEx Corp. cut its forecast for fiscal 2009 earnings and capital spending late Monday as the slumping economy cut into package deliveries. And chip maker Texas Instruments Inc. warned of a significant, broad-based deterioration in business and forecast fourth-quarter earnings and revenue substantially below earlier expectations.

Meanwhile, Japanese electronics maker Sony Corp. said it is slashing 8,000 jobs, or 4 percent of its global work force, to cut costs by $1.1 billion a year as the worldwide downturn batters profits.

In other corporate news, AutoZone Inc. reported fiscal first-quarter profit declined amid higher expenses and weak domestic same-store sales for the auto parts retailer. Delta Air Lines Inc. will get a $1 billion boost following a credit card agreement it reached with American Express Corp.

The market showed renewed confidence on Monday following President-elect Barack Obama's promise to increase infrastructure spending to lift the economy. That lifted the Dow Jones industrial average nearly 300 points to their highest level in a month.

During the past two sessions, the blue chip index has gained 560 points — and appears ready to extend the advance on Tuesday. Dow futures rose 35, or 0.39 percent, to 8,910, while Standard & Poor's 500 index futures added 4.50, or 0.50 percent, to 909.20. Nasdaq 100 futures rose 6.50, or 0.54 percent, to 1,218.50.

In economic news, the National Association of Realtors will release a report at 10 a.m. EST on pending home sales for October. Sales have been down in five of the first nine months of the year, and likely will decline again.

Bond prices were little changed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.73 percent from 2.74 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, held steady at 0.01 percent, still indicating a high degree of investor uneasiness.

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

Oil prices edged higher amid investor expectations that OPEC will announce a big production cut next week to curb crude's stunning 70 percent-free-fall over the past five months. Light, sweet crude rose 20 cents to $43.91 a barrel in electronic trading on the New York Mercantile Exchange.

Stock markets were mixed overseas. Hong Kong's Hang Seng index closed down 1.94 percent after a big surge on Monday, while Japan's Nikkei 225 added 0.80 percent. Major European bourses were higher ahead of the U.S. open, with Britain's FTSE-100 climbing 1.55 percent, Germany's DAX up 1.07 percent, and France's CAC-40 adding 1.08 percent.


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