By Joe Bel Bruno, AP Business Writer
NEW YORK (AP) -- Wall Street showed more signs of stability Tuesday as investors shook off a record low reading on consumer confidence and placed some moderate bets in the last days of a brutal 2008.
The Conference Board's Consumer Confidence index dropped to 38 in December from a revised 44.7 in November, well below the expectation of 45 of economists surveyed by Thomson Reuters.
Investors were well prepared for a disapppointing reading after consumers reluctant to spend left retailers with their worst holiday season in years. The International Council of Shopping Centers reported Tuesday that weekly same-store sales dropped 1.5 percent last week from the 40 retailers it polls.
The market got some support from a slight rise in the Chicago Purchasing Managers Index, which measures manufacturing activity in the Midwest. The index for December crept up to 34.1 from November's 33.8. It is considered a precursor to the national index to be released by the Institute for Supply Management on Friday.
Investors also drew some comfort from the government's decision to provide $5 billion to General Motors Corp.'s troubled financing arm. The Treasury Department said late Monday it would provide the money to GMAC Financial Services LLC from the $700 billion bank rescue program. The Federal Reserve last week approved GMAC's application to become a bank holding company, a move that cleared the way for the company to receive money from the financial rescue fund.
The injection is on top of the $17.4 billion in loans the Bush Administration agreed to provide to the auto industry on Dec. 19. GMAC said Tuesday it would immediately resume lending to certain customers it had previously said were too great a risk for auto loans because of tight credit markets.
In midmorning trading, the Dow Jones industrial average rose 51.37, or 0.61 percent, to 8,535.30.
Broader indexes also were higher. The Standard & Poor's 500 index rose 6.93, or 0.80 percent, to 876.35; the Nasdaq composite index rose 12.52, or 0.83 percent, to 1,522.84.
With many traders away for the holidays, stocks have shown small moves in light volume in recent sessions. Most investors are looking past 2008 for clues about how stocks will fare in the coming year. The major stock market indicators are down 36 percent to 43 percent for the year.
Subodh Kumar, global investment strategist at Subodh Kumar & Associates in Toronto, said the market's moves in the final days of the year are more noteworthy than some investors realize; stocks have been fairly steady despite low trading volume that could easily lead to sharp declines. But he predicts trading will remain volatile into mid-2009.
"It's still relatively encouraging that the markets have been able to hold up," he said.
