UPDATED:
Wall Street shifted gear and moved higher Wednesday, apparently riding on hopes that Congress will give two Detroit automakers a total of $15 billion in loans. The optimism overrode more recession news from the government.
All of the market indexes rose more than 1 percent.
Wholesalers cut back their inventories by 1.1 percent in October, the biggest drop in seven years shortly after 9/11, the Commerce Department reported.
Nevertheless, the Dow Jones Industrial average was up 126.40, or 1.45 percent, to 8817.73. The Nasdaq rose 26.43, or 1.71 percent, to 1573.77, and the broader Standard & Poor’s 500 climbed 13.60, or 1.53 percent, to 902.27.
The inventory reduction came as sales at the wholesale level plummeted 4.1 percent in October, the biggest decline on record, in the midst of declining business among retailers. Analysts had expected the inventory cutback to be only 0.2 percent, not the 1.1 percent that was reported.
Commerce reported that the inventories of nondurable goods, which include food, clothing and petroleum products, fell even more in October 2.6 percent, a record.
At the same time, the Rio Tinto Group, one of the worlds biggest miners with offices in 40 countries, announced from Sydney, Australia, that it will cut 14,000 jobs worldwide and reduce its capital investment. Most of its employees are in North America and Australia.
The job reductions account for 12.5 percent of its 112,000-person labor force, the London-based company said.
As for the U.S. auto industry, Congress could vote as early as Wednesday on speeding money to General Motors Corp. and Chrysler LLC despite a speed bump erected by some conservative Republicans led by Sen. John Ensign, R-Nev.
Ford Motor Co. says it doesnt need the money.
President Bush favors the compromise, which includes a “car czar” who would oversee spending of the bailout money to ensure that it would used to ensure the survival of the two auto giants.
Overseas, both the major European and Asian markets showed gains before the New York open.
The markets appear ready to rise on any smidgeon of good news spotted through the gloom of poor earnings reports, sliding retail sales and increasing jobless numbers in what seems to be a worsening recession. The tumble in stock prices may have reached bottom.
Even with the drop of nearly 253 points in the Dow Tuesday, the index has climbed 15 percent since hitting multiyear trading lows Nov. 20, the Nasdaq has moved up 17.6 percent and the S&P 500 has risen 18.1 percent.
Sign up for Daily Newsletters
