NEW YORK (AP) — The swine flu gave Wall Street a brief scare Monday, but stocks regained stability as worries about the virus subsided and General Motors Corp. released a restructuring plan.
The major indexes were modestly higher by midday, and GM jumped 24 percent.
The bailed-out automaker said it will cut 21,000 U.S. factory jobs by next year, phase out the Pontiac brand and ask the government to take company stock in exchange for half GM’s government debt. The announcement did not erase the possibility of a GM bankruptcy,
but made it appear less likely. Shares 41 cents to $2.10.
Investors’ anxiety also subsided about a swine flu that has killed more than 100 people in Mexico. The United States and Canada have had several cases, but none have been fatal. The European Union health commissioner advised Europeans to avoid nonessential travel to
Mexico and the United States, but the Centers for Disease Control and Prevention in Atlanta said the recommendation was unwarranted.
Craig Peckham, market strategist at Jefferies & Co., said the swine flu was an “easy excuse” for investors to cash in any profits they may have made in recent weeks. When the morning selloff failed to build momentum, buyers stepped in to take advantage of dampened
In late morning trading on Monday, the Dow Jones industrial average rose 33.05, or 0.4 percent, to 8,109.34, after falling by more than 1 percent in early trading.
Broader stock indicators also gained. The Standard & Poor’s 500 index rose 1.09, or 0.1 percent, to 867.32, and the Nasdaq composite index rose 2.84, or 0.2 percent, to 1,697.13.
The stocks of many airlines, hotels and other travel-related companies still posted losses.
Starwood Hotels and Resorts Worldwide Inc. fell 5.6 percent, Carnival Corp. fell 10 percent, and Delta Air Lines Inc. fell 11 percent.
The Russell 2000 index of smaller companies fell 1.97, or 0.4 percent, to 476.77.
Better-than-expected earnings and economic reports over the past few weeks have helped buoy stocks. The Dow stalled last week, but remains up about 23 percent since its nearly 12-year low on March 9.
In anticipation of an economic turnaround, many investors like Robert Pavlik, chief market strategist at Banyan Partners LLC, have been paring back on traditionally safe stocks like consumer staples and buying more financials and consumer discretionary stocks.
“We are in a downturn, in this slowing economic phase, but it’s not as bad as people originally perceived,” Pavlik said. “What we’re telling our clients is: Don’t focus on the last three months.”
U.S. government bond prices were mixed. The yield on the benchmark 10-year Treasury note dipped to 2.98 percent from 3.00 percent late Friday. Bond prices move opposite to yields.
The dollar was mostly higher against other major currencies, while gold prices fell.
Light, sweet crude fell $1.40 to $50.15 a barrel on the New York Mercantile Exchange.
Overseas, Japan’s Nikkei stock average rose 0.2 percent. Britain’s FTSE 100 rose 0.3 percent, Germany’s DAX index rose 0.4 percent, and France’s CAC-40 fell less than 0.1 percent.