Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Stocks inch lower

Investors wary about outlook for Detroit's Big Three.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By CNNMoney.com staff

What impact would a General Motors bankruptcy have on the nation?
  • It would devastate the economy
  • It would be difficult, but a recovery would come
  • It would have no impact

NEW YORK (CNNMoney.com) -- Stocks weakened Monday morning as investors mulled the future of the automakers and looked to economic news due later in the week.

The Dow Jones industrial average (INDU) and the Standard & Poor's 500 (SPX) index were both little changed in the early going. The Nasdaq composite (COMP) inched lower.

Robert Brusca, chief economist at Fact and Opinion Economics, said that bailout hopes are the prime factor in influencing the markets Monday, outweighing the importance of a slew of industrial indicators.

"I don't think today is going to hang on economic reports," said Brusca. " I think today is going to hang on what the president says, and what he's going to do to help Detroit. The automakers don't have a lot of time. The market continues to need President Bush to hold its hand."

But Dave Rovelli, managing director of Canaccord Adams, said the markets stand a strong chance of rallying. He said "oversold" stocks have become resilient in the face of bad news and are waiting for a positive catalyst.

Auto rescue: The Bush administration said Friday it might use taxpayer dollars set aside to bail out banks and Wall Street firms to keep troubled U.S. automakers out of bankruptcy. (Full story)

In a discussion with reporters aboard Air Force One en route to Afghanistan, Bush said it was a "possibility" that money from the $700 billion bailout earmarked for Wall Street could be used to aid the Big Three automakers.

Details of when the help might be provided, how much money would be made available, and any restrictions on the cash were not immediately available.

Madoff case: Spreading losses from an alleged $50 billion scheme run by money manager and ex-Nasdaq chief Bernard Madoff weighed on confidence as the list of victims grew.

On Monday, Japan's largest brokerage, Nomura Holdings, said it has about $306 million in exposure to the scheme. French bank BNP Paribas and Spain's Grupo Santander also said they had exposure to Madoff's investment funds.

Fed meeting: The Federal Reserve kicks off a two-day meeting Monday. The central bank is widely expected to cut the fed funds rate, a key short-term interest rate, by a half-percentage point to 0.5%. The decision is due Tuesday.

World markets: Global markets advanced on revived hopes of a U.S. auto bailout. Japan's Nikkei index soared 5%. The major exchanges in Europe were all in positive territory in morning trading.

Oil and money: Oil prices rose $2.81 a barrel to $49.09 in electronic trading. The dollar fell against a wide spectrum of international currencies, including the yen, the euro and the British pound.

Economy: The New York Empire State Index for general business conditions fell to -25.8 for the month of December, down from -25.4 in the prior month. But this is not as low as the -27 projection from a consensus of economists provided by Briefing.com.

At 9:15 a.m. ET, the Federal Reserve reported capacity utilization of 75.4% for November, short of forecasts for 75.9% for November and down from a revised 76% in the prior month. Industrial production fell 0.6% versus forecasts for a drop of 0.8% and compared to a revised gain of 1.5% the month before. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
The best gadget gifts for 2017 A holiday gift guide for anyone who wants to spread some techie joy. More
14 awesome toys for the holiday wish list From a DIY Star Wars Droid to a new Hatchimals toy and interactive Fingerlings, these products are worthy of a coveted spot on holiday wish lists. More
11 tasty treats to bring back from a business trip Nothing is as crowd-pleasing or pragmatic as edible souvenirs. We've found foodie gifts that are both delicious and distinguished in 11 popular business destinations. More