NEW YORK (Reuters) - Stocks rose on Friday on hopes that a lifeline for struggling U.S. automakers could still materialize, while investors bet the large stockpiles in cash at technology companies will help them weather the economic downturn.
In the latest in the U.S. automakers’ attempt to secure a financial rescue, the White House said it could be willing to provide emergency funding to the struggling auto industry, the day after Congress failed to approve a deal.
Gains by the Nasdaq outpaced the other two major indexes
as investors scooped up big-cap technology shares. Apple helped lift the Nasdaq, rising more than 3 percent. This year, the Nasdaq is down 42 percent, underperforming the Dow’s drop of about 35 percent.
“The expectation is that tech will be one of the first, not the last of the sectors to rebound,” said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.
James pointed out that investors have shrugged off disappointing news from technology companies, including Texas Instruments TXN.N.
The Dow Jones industrial average .DJI rose 64.59 points, or 0.75 percent, to end at 8,629.68. The Standard & Poor's 500 Index .SPX added 6.14 points, or 0.70 percent, to 879.73. The Nasdaq Composite Index .IXIC jumped 32.84 points, or 2.18 percent, to 1,540.72.
The day’s gains come as the broad market has been trying to recover from the S&P 500’s 11-year intraday low hit on November 21. During the course of the day, the three major U.S. stock indexes rebounded from a drop of about 2 percent or more at the open.
So far this year, the broad S&P 500 is down about 40 percent. But since the November low, the S&P has pulled itself back up almost 19 percent.
For the week, the Dow was down 0.1 percent, its second straight week of declines.
But the S&P was up 0.4 percent for the week and the Nasdaq rose 2.1 percent.
Investor confidence took another hit with the arrest of former Nasdaq Chairman Bernard Madoff, who was charged with running a $50 billion “Ponzi scheme” in what would be one of the largest fraud cases ever.
Uncertainty over the fate of automakers kept shares of GM and Ford vacillating between positive and negative territory. Ford ended up 4.8 percent at $3.04, while GM lost 4.4 percent to $3.94.
GM, Ford and Chrysler employ nearly 250,000 people directly and 100,000 more jobs at parts suppliers could depend on their survival. The industry fears the failure of one Detroit manufacturer could drag down the other two.
Among blue-chip stocks, United Technologies Corp (UTX.N) was the Dow’s biggest boost, a day after the diversified manufacturer gave some reassuring comments on its outlook. United Technologies’ shares rose 3.7 percent to $48.82 on the New York Stock Exchange.
On the downside, Boeing Co (BA.N) was the Dow’s biggest drag, falling 2.7 percent to $39.20 a day after the large U.S. aircraft manufacturer said it was delaying its 787 Dreamliner jet for the fourth time.
Volume was low on the New York Stock Exchange, with about 1.44 billion shares changing hands, below last year’s estimated daily average of roughly 1.90 billion, while on Nasdaq, about 1.91 billion shares traded, below last year’s daily average of 2.17 billion.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 3 to 2, while on the Nasdaq, two stocks rose for every one that fell.
Editing by Jan Paschal