Street trades higher after GM-UAW pact
EmptyNEW YORK -- Stocks rose handily Wednesday after General Motors Corp. reached a tentative contract agreement with the United Auto Workers and as another lackluster economic report stirred hopes that the Federal Reserve will cut interest rates again.
GM shares rose after the UAW announced a halt to a two-day strike while the union considers the contract offer. Production at GM facilities was expected to resume on Wednesday. The deal could help GM pass some of its health care costs to the union.
Beyond the GM news, the Commerce Department said demand for durable goods fell in August, indicating that the recent credit crisis might have hurt U.S. companies. Orders for durable goods dropped 4.9% last month to a seasonally adjusted $219.53 billion.
The report follows data released Tuesday that showed existing home sales stalled in August, and consumer confidence in September remains a worry. Investors are hoping the data will persuade the Fed to drop rates again.
Policymakers decided last week to lower rates by a half-point, the first cut in four years. It triggered a rally on Wall Street as stocks bounced from their lows of the year.
In addition to corporate and economic news, some of the session's gains could be anticipating the approaching end of the quarter.
"I do think what you're seeing here is because we had such a big turnaround from August into September, the quarter is ending on a positive note. As you get closer to the end in the next couple of days, you could get some window dressing," said Marc Pado, U.S. market strategist at Cantor Fitzgerald, referring to some investors' plans to buy stocks to shore up their end-of-the-quarter holdings.
In late morning trading, the Dow Jones industrial average rose 85.92, or 0.62%, to 13,864.57.
Broader stock indicators also rose. The Standard & Poor's 500 index advanced 9.63, or 0.63%, to 1,526.84, and the Nasdaq composite index increased 23.23, or 0.87%, to 2,706.68.
The Russell 2000 index of smaller companies rose 8.39, or 1.04%, to 811.39.
Bonds fell, with the yield on the benchmark 10-year Treasury note jumping to 4.65% from 4.64% late Tuesday. The dollar was mixed against other major currencies, and gold prices fell.
Oil prices fell again as they had earlier in the week. The price of a barrel of light, sweet crude fell 26 cents to $79.27 on the New York Mercantile Exchange after government figures showed demand for oil dropped last week. Oil has pulled back from last week when it logged a string of record closes and traded near $84.
In corporate news, GM jumped $1.68, or 4.9%, to $36.10 on news that workers would return to their jobs. GM was by far the biggest advancer among the 30 stocks that make up the Dow industrials.
Nasdaq Stock Market Inc. and Borse Dubai upped their offer to acquire Nordic exchange operator OMX to 265 kronor a share from 230 kronor. The two acquiring stock exchanges also said they secured 47.6% stake in OMX, which the latest offer values at $4.9 billion. Nasdaq Stock Market shares rose 33 cents to $36.58.
Red Hat Inc. shares advanced $1.02, or 5.4%, to $19.91 after the maker of open-source software reported its second-quarter profit rose 59% and revenue came in ahead of Wall Street projections.
Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange, where volume came to 431.9 million shares.
Overseas, Britain's FTSE 100 rose 0.60%, Germany's DAX index rose 0.46%, and France's CAC-40 rose 0.85%. In Asia, Japan's Nikkei index closed up 0.21% and Hong Kong's Hang Seng Index fell 0.46%.