Stocks jump as GM returns to Wall Street
The automaker's shares rise as much as 9%. Global markets climb after Ireland says it might seek funds to help its banks. New jobless claims rise less than expected.
By Melinda Peer, TheStreet
Updated at 1:55 p.m. ET
Stocks were rallying Thursday as investors cheered General Motors' (GM) return to Wall Street and as Ireland appeared willing to accept aid for its banks.
At 1:55 p.m. ET, the Dow Jones Industrial Average ($INDU) was up by 177 points, or 1.6%, at 11,185. The S&P 500 ($INX) was up by 20 points, or 1.7%, at 1,199. The Nasdaq ($COMPX) was rising by 46 points, or 1.8%, to 2,522.
General Motors shares were climbing 5.2% to $34.70 -- rising as much as 9% earlier today -- as the stock returned to public trading on the New York Stock Exchange. The carmaker sold roughly 478 million shares at $33 each in an initial public offering late Wednesday.
Proceeds from GM's stock offer, which could raise $23 billion, will be used to pay back the U.S. government, which became a majority shareholder when the automaker filed for bankruptcy protection in June 2009.
"The GM IPO, which at this stage appears to be successful, is the most visible, single element contributing to today's rally," said Lawrence Creatura, portfolio manager at Federated Investors (FII). Creatura also said signs that Ireland might accept aid gave the U.S. market an early boost.
Patrick Honohan, the governor of Ireland's central bank, told Irish broadcaster RTE yesterday that the country would likely seek a bailout from the European Union and the International Monetary Fund worth tens of billions of euros.
Hong Kong's Hang Seng gained 1.8%, and Japan's Nikkei jumped 2.1%. The FTSE in London rose 1.3%, and the DAX in Frankfurt climbed 2%.
Developments in Ireland boosted the euro, which rose against the dollar to $1.36 from $1.35 Wednesday. The dollar traded lower against a basket of currencies, with the dollar index down 0.6%.
The weaker dollar lifted commodity prices. The December gold contract was up by $15.80 to $1,352.70 an ounce. The January crude oil contract was up by $1.72 at $82.16 a barrel.
Retailers were among the session's top gainers while financial stocks were the most sluggish. Alcoa (AA) and DuPont (DD) were benefiting from increased commodity prices, helping them lead the Dow. Home Depot (HD) and Intel (INTC) were the benchmark’s biggest laggards.
The Labor Department said the number of new people seeking unemployment benefits rose by 2,000 to 439,000 during the week ended Nov. 13, fewer than the 7,000 additional claims economists had expected.
Manufacturing activity in the Philadelphia region surged in November, according to the Philadelphia Federal Reserve Bank's index, which hit 22.5 after October's level of 1. According to Briefing.com, economists had expected a reading of 5.
The Conference Board said its gauge of October leading indicators rose 0.5% after similar growth in September. The increase was below the 0.6% increase economists had forecast.
In other company news, shares of Sears Holdings (SHLD) were down by 3.7% to $62.50 after its third-quarter loss widened to $1.98 a share, worse than expectations for a loss of $1.08 a share. Sales fell 5% to $9.68 billion, missing estimates of revenue of $9.89 billion.
Shares of Limited Brands (LTD) were trading 6.9% higher to $34.08 after the retail company exceeded third-quarter expectations, lifted its full-year outlook and announced a buyback of up to $200 million.
Shares of NetApp (NTAP) were up 7.3% to $52.85 after the storage and data-management company surpassed analysts' expectations with earnings of 52 cents a share.
Humana (HUM) stock was down 3.1% to $56.25 after the health insurer forecast fiscal 2011 earnings that fell short of expectations.
The benchmark 10-year Treasury note declined 19/32, lifting the yield to 2.952%.
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Great News! GM is on a roll? Wonder if that means they're going to reimburse all those previous owners of their common stock which was made worthless after the bankruptcy?
Their "success" is built on the corpses of all the folks who were unfortunate enough to buy their stock the last time around - plus a sizeable infusion of cash from all of us, the taxpayers.
Deklen and I are usually 180 degrees opposite, but we can agree on a few things...
We MUST end to big to fail. Corporations must be allowed to be bankrupt. Their shareholders wiped out. We cannot rescue every failed company. We didn't rescue Enron, and it employeed mor epeople than GM does.
We MUST end corporate Welfare. No government subsidies should be given to favored industries. Look at the unfair competitive advantage GM now has over Ford...
We must end corporate taxes. Donkeys think corporate taxes are paid for by the rich. Laughable, they are nothing more than hidden sales taxes punishing the poor. Any doubt? .34 cents of the cost of a package of Oreo's goes to pay corporate taxes.
We need to SHRINK government. Does govermnent really need to be 20 times larger than it was in 1930?
We need to slash defense spending. We cannot afford to be the World's Policeman without being paid
Buy and sell stocks - I don't care. Buy and sell precious metals - I don't care. Max out your credit cards and your home equity and then walk away and file bankruptcy - I don't care. Make a bunch of money or go broke - I don't care. I only ask you to consider the possibilities and then do what's best for you and your family. And if the worst happens and you are unprepared, please don't expect the gov to bail you out. If you are currently getting aid from the gov, please prepare for a time when that flow of money will stop.
As far as being happy, I was taught at an early age, the secret to happiness is NOT having what you want, it's wanting what you have. I have a nice family, a nice little house and a little bit of land. We certainly aren't wealthy, but we don't lack much either. We try and make as much as we can, save as much as we can and give away as much as we can - be it time or money. As far as I'm concerned, I couldn't be happier. And from what I've read, most other members of the alleged "D&G crowd" are probably also very happy, contrary to popular belief.
Responder. Unfortunately the volatility in the market is here to stay.
Not necessarilly. If you taxed investment income at the same rate as all other forms of Income, you'd chase a LOT of speculators out of the market, which would add some stability (and sanity) back to the markets.
I know, crazy idea to treat all forms of income as equal...
Whether TARP or the GM bailout keep some companies afloat or work out in favor of the taxpayers is irrelevant. The money was taken from me against my will and I don't care that it was for good intentions or not.
If we had allowed GM and the banks to fail it wouldn't have taken long for new banks to form and fill the void and for GM to be spun off or its assets sold. Sure some people would have been wiped out but most of the agreements were entered into willingly and only those that were harmed unlawfully should have had any protection.
It is morally wrong to steal and taxation is stealing. I personally try to make the proper moral choice at each decision point (even if it adversly affects me) and if it means I end up living in a lean-to shelter - so be it. If you take that to the macro level then our country needs to quit worrying so much about the general welfare and just focus on making the proper moral choice at each decision point. If that means the general public ends up living in a lean-to shelter - so be it. Accepting that some people live (through their own choice or life's circumstances) in a lean-to shelter without access to food, healthcare, or an education might not be pleasant but it is not immoral - stealing is.
I just don't understand why the will of the people isn't extremely limited to only those issues that don't infringe on another individual. Our system could be so much simpler and direct without all the levels of indirection and unintended consequences. We have made things way more complex than they need to be in an effort to force the end result - whether it be universal housing, healthcare, education, etc.
There are some difficult areas where individual vs common rights collide (e.g. security, pollution, maybe some limited regulation) but those are really the only types of things that should be getting decided by the will of the people.
The fact that some people don't have jobs or healthcare is a problem, but it doesn't bother me as much as the fact that this generation is so weak and corrupt that they have stolen money, especially from future unborn generations who have no say in the matter, to finance a lifestyle to which they have no moral right.
If the doom and gloomers are wrong and the optimists are right, and our economy hums along and does great then everyone's a winner, us, our kids etc. No negative consequences for anyone really.
If however the optimists are wrong and the doom and gloomers are right, then the results will be devastating for many people and our country at large. If this occurs, many people, including the optimists may regret not pushing harder for political leaders that might have made needed changes. Moreover, the optimists will likely have major regrets about not personally taking different action.
I figure you and 2sick either are either hypocritical with that attitude or pissed you are not making a dime.
to Rtt and others:This post above is short sighted. I have made money in the market. I have pension money in the market.
What you fail to realize is that some people see a bigger picture. They don't see the economy as "the market." So what if you or I make money in the market today, if the whole system tanks tomorrow or in 6 months or a year.
You might have the coolest tree house in the forest and think that everything is great. However, if the surrounding forest is on fire and it is closing in on you, the importance and value of your tree house diminishes.
Such is how many of us view things today. I could care less if I make 10K in the market today, if the 10K could become worth 100 dollars in a year due to currency debasement or other systemic problems.
2 sick,
We bought on issuance of the IPO. I trust Ford more but we shall see. If Obama Motors pays back the FEDS, I think some trust will reemerge and it will again be called General Motors. They have changed their business model to emulate Ford. That's good.
If that sounds like a shaky answer, IT IS!!!
gamer-
my sentiments exactly.
I thought all the Ayn Rand types said let it go bankrupt. That is how the market works.
US Gov't bought it on the cheap because no one had the guts or the bucks to do it. And now the Treasury is getting a nice return. Saved a bunch of jobs too.
I guess KKR is eating its heart out. Missed another one. Darn.
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