Wall Street started the week on a leery note Monday, trading mixed as investors' anxieties turned from the beleaguered auto industry to the growing list of firms affected by Wall Street investment manager Bernard Madoff.
Investors were relieved to hear that President George W. Bush, discussing the automakers, told reporters Monday that "we're now in the process of working with the stakeholders on a way forward." The Senate last week rejected a $14 billion bailout for General Motors Corp., Chrysler LLC and Ford Motor Co. - raising the possibility of an automaker bankruptcy, which some analysts say would result in as many as 3 million U.S. job losses next year.
But as that fear eased, at least for the time being, another one cropped up. More and more individuals and companies have been revealing exposure to Madoff's fund, which prosecutors say was a $50 billion Ponzi scheme to defraud investors. Those firms include HSBC Holdings PLC, Banco Santander, BNP Paribas, Royal Bank of Scotland Group PLC and hedge fund Man Group PLC.
"The investor psyche is already quite fragile. Scandals like this just add fuel to the fire," said Alan Gayle, senior investment strategist for RidgeWorth Capital Management.
Investors also seemed hesitant to make any major moves ahead of the Federal Reserve's Tuesday decision on interest rates. Some analysts anticipate policy makers to cut the key rate by a half-point to 0.5 percent, while others expect a three-quarter-point reduction to 0.25 percent - which would be the lowest key rate on records going back to 1954.
"A Fed ease this week has long been anticipated by the market; the only news would be if the Fed did not cut," Gayle said. He added that the market will probably pay close attention to the statement the central bank releases about the economy and the possibility of future policy actions.
In the first hour of trading, the Dow Jones industrial average rose 5.98, or 0.07 percent, to 8,635.66.
General Motors was the biggest gainer in the Dow, rising 22 cents, or 5.5 percent, to $4.16. The biggest loser in early trading Monday was JPMorgan Chase & Co., which fell $1.62, or 5.2 percent, to $29.32, alongside other declining financial stocks.
Broader stock indicators were mixed. The Standard & Poor's 500 index rose 0.08, or 0.01 percent, to 879,81, while the Nasdaq composite index fell 5.07, or 0.33 percent, to 1,535.65.
The Russell 2000 index of smaller companies rose 1.23, or 0.26 percent, to 469.66.
The Dow ended last week down 0.07 percent; the S&P 500 index finished the week up 0.42 percent; and the Nasdaq composite index ended the week up 2.08 percent. The Dow is still down about 35 percent for the year, while the S&P 500 and Nasdaq are down more than 40 percent.
Stocks have fallen as Wall Street braces for a long, sharp recession in the United States and other developed countries around the world. In economic data Monday, the Fed reported a decline in November industrial production, and the New York Fed reported a massive contraction in regional manufacturing activity.
Bond prices edged higher Monday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.57 percent from 2.58 percent late Friday. The yield on the three-month T-bill - a safe short-term asset that's in very high demand - dipped to 0.02 percent from 0.04 percent late Friday.
The dollar fell against other major currencies, while gold prices rose.
Light, sweet crude rose $2.37 to $48.65 a barrel on the New York Mercantile Exchange.
Markets overseas advanced. Japan's Nikkei stock average rose 5.21 percent, while Hong Kong's Hang Seng index rose 1.96 percent. In afternoon trading, Britain's FTSE 100 rose 0.80 percent, Germany's DAX index rose 1.55 percent, and France's CAC-40 rose 0.85 percent.
