US stocks rally despite jobless rate hike, automakers’ lossesNovember 8th, 2008 - 6:36 am ICT by IANS
New York, Nov 8 (DPA) After two days of major declines, US stocks rose Friday despite a sharp hike in unemployment and massive losses reported from major automakers.The Wall Street rally was attributed to speculation that the Federal Reserve would lower interest rates next month to combat a surging unemployment rate. The US Labour Department reported Friday that unemployment climbed to 6.5 percent in October, after another 240,000 jobs were lost in a worsening sign for the economy.
The jobless rate jumped from 6.1 percent in the previous two months, and marked an increase of 1.7 percent, or 2.8 million fewer jobs, over the last year. The total number of US unemployed now stands at 10.1 million, the department said.
There were gains for Exxon Mobil Corp, the biggest oil company, which rose 6.3 percent, and Alcoa Inc, the country’s largest aluminium producer, which climbed 9.1 percent.
It was a disastrous day for major US automakers. Ford Motor Co reported a third-quarter operating loss of $2.98 billion and said it would cut jobs and spending to preserve its perilous cash reserves.
The losses reported by Ford, the second-largest US automaker, were reflected by General Motors Corp, which warned Friday that it was running out of the minimum cash it needs to operate till the end of the year, and posted third-quarter operating losses of $4.2 billion.
GM, the largest US automaker, has sought federal aid to avoid a collapse. The company said it needs at least $11 billion in cash each month to pay its bills.
US auto sales plummeted 32 percent in October to the lowest monthly total since 1991.
Meanwhile, US president-elect Barack Obama pledged Friday to move toward resolving the country’s financial woes “immediately” after taking office in January, saying the nation was facing its worst economic crisis in a lifetime.
Speaking to reporters in Chicago in his first public appearance since winning Tuesday’s election, Obama sought to reassure Americans that he was poised to address the country’s urgent challenges.
Obama said he will introduce economic policies to ease the burden on the middle class, including tax cuts, and extend unemployment benefits. He also said his top priority will be to enact an economic stimulus package to boost the economy if it has not already been completed under the current administration.
The blue-chip Dow Jones Industrial Average gained 248.02 points, or 2.85 percent, to 8,943.81. The broader Standard & Poor’s 500 Index was up 26.11 points, or 2.89 percent, to 930.99. The technology-heavy Nasdaq Composite Index rose 38.70 points, or 2.41 percent, to 1,647.40
The US currency climbed to 78.632 euro cents from 78.613 euro cents on Thursday. The dollar rose to 98.22 yen from 97.695 yen a day earlier.