- The Washington Times - Wednesday, December 31, 2008

Wall Street rallied Tuesday, ignoring a report saying consumer confidence fell to a record low this month and focusing on the Treasury Department’s decision to lend $5 billion to the financial arm of General Motors Corp. and what it might mean for future consumer buying.

In the next-to-last trading day of the year, all of the major indexes rose by more than 1 percent, with the Dow up more than 180 points. The markets will be closed Thursday for New Year’s Day.

At the close, the Dow Jones Industrial Average jumped 184.46 points, or 2.17 percent, to 8668.39. The tech-heavy Nasdaq soared 40.38, or 2.67 percent, to 1550.70. The broader Standard & Poor’s 500 climbed 21.22, or 2.44 percent, to 890.64.

The market’s apparent focus on the federal loan to GMAC Financial Services LLC, which is a look to the future, overshadowed a report by the Conference Board showing that its Consumer Confidence Index plunged to 38 in December, a drop from 44.7 in November.

A Briefing.com survey of economists said they were expecting the index to rise to 45.5.

The worsening job market, a 6.7 percent unemployment rate and the unwillingness of consumers to spend money in the midst of a deepening recession seemed to far outweigh the optimism of economists surveyed.

Consumer spending accounts for about two-thirds of U.S. economic activity, and the confidence level of American consumers is significant because it determines their willingness to open their wallets.

A Present Situation Index, which is separate from the Consumer Confidence Index, dropped to 29.4 this month from 42.3 in November, near levels that were reached during the 1990-91 recession. The index measures how people feel about employment opportunities and business conditions.

The Conference Board is a business research group that is based in New York and also publishes a monthly report on leading economic indicators.

The dollar was mixed against other major currencies, while gold prices fell.

In corporate news, shares of GM rose 20 cents, or 5.6 percent, to $3.80 after GMAC was given government financing. GM owns 49 percent of GMAC, while private equity firm Cerberus Capital Management holds the remainder, according to the Associated Press.

The Russell 2000 index of smaller companies rose 16.62, or 3.57 percent, to 482.77.

Overseas, Japan’s Nikkei stock average rose 1.28 percent in the final session of the year, ending 2008 with a loss of 42 percent. Markets in Japan are closed for a holiday Wednesday. Britain’s FTSE 100 rose 1.70 percent, Germany’s DAX index rose 2.24 percent, and France’s CAC-40 rose 2.76 percent.

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