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Stocks head toward 3rd session of gains

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[December 09, 2008]  NEW YORK (AP) -- Wall Street pointed to a third straight session of gains on Tuesday as investors held on to hopes that the government will reach an agreement to rescue U.S. automakers.

InsuranceNegotiators worked through the night to come up with a $15 billion bailout for Ford Motor Co., General Motors Corp., and Chrysler LLC. A deal might occur as early as Wednesday.

The proposal being worked on reportedly would give the government an ownership stake in the automakers. The market is concerned that a collapse of any of the three companies would trigger massive job losses, and further stymie the government's efforts to lift the U.S. out of a recession.

The pending deal helped alleviate investor anxiety about corporate earnings.

FedEx Corp. cut its forecast for fiscal 2009 earnings and capital spending late Monday as the slumping economy cut into package deliveries. And chip maker Texas Instruments Inc. warned of a significant, broad-based deterioration in business and forecast fourth-quarter earnings and revenue substantially below earlier expectations.

Meanwhile, Japanese electronics maker Sony Corp. said it is slashing 8,000 jobs, or 4 percent of its global work force, to cut costs by $1.1 billion a year as the worldwide downturn batters profits.

The market showed renewed confidence on Monday following President-elect Barack Obama's promise to increase infrastructure spending to lift the economy. That lifted the Dow Jones industrial average nearly 300 points to their highest level in a month.


During the past two sessions, the blue chip index has gained 560 points -- and appears ready to extend the advance on Tuesday. Dow futures rose 41, or 0.46 percent, to 8,916, while Standard & Poor's 500 index futures added 6.70, or 0.74 percent, to 911.40. Nasdaq 100 futures rose 12.50, or 1.03 percent, to 1,224.50.

In economic news, the National Association of Realtors will release a report at 10 a.m. EST on pending home sales for October. Sales have been down in five of the first nine months of the year, and likely will decline again.

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Bond prices continued to fall as investors put money back into stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.75 percent from 2.74 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.02 percent from 0.01 percent on Monday, still indicating a high degree of investor uneasiness.

The dollar was mixed against other major currencies, while gold prices rose.

Oil prices edged downward amid investor expectations that OPEC will announce a big production cut next week to curb crude's stunning 70 percent-free-fall over the past five months. Light, sweet crude fell 31 cents to $43.40 a barrel in electronic trading on the New York Mercantile Exchange.

Stock markets were mixed overseas. Hong Kong's Hang Seng index closed down 1.94 percent after a big surge on Monday, while Japan's Nikkei 225 added 0.80 percent. Major European bourses were higher ahead of the U.S. open, with Britain's FTSE-100 climbing 1.34 percent, Germany's DAX up 1.07 percent, and France's CAC-40 adding 1.55 percent.

[Associated Press; By JOE BEL BRUNO]

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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