Auto rescue fails to boost the Street
NEW YORK (AP) — Stock prices pared earlier gains to end a choppy day relatively flat on Friday, as Wall Street remained uncertain that a $17.4 billion lifeline for U.S. automakers will make a lasting difference for the beleaguered industry.
In the early going, investors cheered the government’s pledge to provide General Motors Corp. and Chrysler LLC with short-term financing and sent the Dow Jones industrial average up as much as 182 points. But stocks turned lower at midday, recovered in the afternoon, and then lost ground again in the last hour of trading as initial enthusiasm over the bailout waned.
The companies’ cash flows have been dwindling to a slow trickle due to the weak economy, slumping sales and the credit crunch.
The White House said it will let GM and Chrysler draw $13.4 billion in short-term financing, and another $4 billion will be added later. But it attached conditions that must be quickly met — GM and Chrysler must prove viability, defined as positive cash flow and the ability to pay back government loans, by March 31. Ford Motor Co., meanwhile, is not asking for short-term assistance, but its CEO predicted the aid will stabilize the broader industry.