Stocks Trend Upward

After bobbing in neutral for a time, stocks in New York have restarted their early uptrend.
Publish date:

Updated from 1:01 p.m. EST

Stocks on Wall Street were trading with gains but remained off their highs Friday afternoon as the market burned through news of a $17.4 billion aid package for two ailing Detroit automakers.


Dow Jones Industrial Average

, which earlier rose more than 130 points, was recently up 56 points at 8661, and the

S&P 500

tacked on 9 points to 890. The


added 21 points to 1567.

President Bush said the U.S. government will extend

$13.4 billion in loans to automakers

General Motors

(GM) - Get Report



in December and January through the Troubled Asset Relief Program (TARP), with another $4 billion available in February. The companies have been charged with the task of showing financial viability by March.

"It's not a bridge to nowhere, it's a bridge to Obama-ville," says Michael Pento, senior market strategist at Delta Global Advisors. President Bush allowed the automakers just enough lifeline to help them along until Obama takes over the White House next month, Pento says, and the new administration will likely rearrange all of the stipulations in a more Detroit-and union-friendly manner.

But that's not what Pento thinks should have happened. "They should have filed for Chapter 11 --we need a Detroit without unions or legacy costs," he says, arguing that the automaker pacifier is going to be a permanent line item unless they do serious restructuring.

White House Press Secretary Dana Perino said Thursday that an "orderly bankruptcy" was a possibility for the automakers. But, President Bush said Friday: "If we were to allow the free market to take its course now, it would lead to disorderly bankruptcy and liquidation for the automakers."

Treasury Secretary Henry Paulson argued that Congress should now release the

second half of the $700 billion TARP fund

, which was set up in October to bail out struggling financial institutions. Paulson said the government's reservation of $17.5 billion of said funds for the automakers signals the allocation of the first $350 billion.

"TARP has many manifestations now it's being used to bail out Detroit," says a skeptical Pento, noting that it's going to be hard for Paulson to seriously ask Congress for more money. "If he had a set plan, he should have stuck to it," he says.

The White House reportedly said that it won't necessarily ask Congress to release the second $350 billion, implying that the matter might fall to the new administration.

In company news,



said it will acquire competing Japanese electronics maker


for up to $9 billion through a public tender offer.

Thursday after the close,

Research In Motion


gave a fourth quarter outlook ahead of Wall Street expectations. Nevertheless, Cowen


the stock to underperform.



(ORCL) - Get Report

said its second-quarter revenue came in below analysts' estimates, but executives reassured investors. Shares of both RIM and Oracle were trading higher on Friday.

Debt rating agency Standard & Poor's lowered its rating for 11 financial institutions including

Goldman Sachs

(GS) - Get Report


Deutsche Bank

(DB) - Get Report


JPMorgan Chase

(JPM) - Get Report


Morgan Stanley

(MS) - Get Report


Moving to commodities, crude oil was recently falling 91 cents to $35.31 a barrel. Gold was recently up 40 cents at $838.70 an ounce.

Longer-dated U.S. Treasury securities were falling in price. The 10-year was down 2/32 to yield 2.1% and the 30-year was falling 22/32, yielding 2.6%. The dollar was stronger against the euro, pound, and yen.

Overseas, the FTSE in London and the DAX in Frankfurt were down 1% and 1.3%, respectively. In Asia, Japan's Nikkei and Hong Kong's Hang Seng ended lower.

Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. AP contributed to this report.