U.S. stocks advanced on the first day of trading in 2009, following the biggest annual drop for the Standard & Poor’s 500 Index in 71 years, on expectations government stimulus efforts will curtail the recession. General Motors Corp., the largest U.S. automaker, rallied 10 percent after receiving $4 billion in initial rescue loans from the Treasury to help it avoid collapse. Citigroup Inc. rose as much as 3.3 percent, while Alcoa Inc. climbed 5.2 percent and Home Depot Inc. added 2.8 percent. Starwood Hotels & Resorts Worldwide Inc. jumped 16 percent on takeover speculation after agreeing to notify one of its largest investors of any offers. “The worst has been seen,” Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, said on Bloomberg Television. The firm manages $190 billion. “I’m not looking for a super year in 2009; I think we’ll do better.” The S&P 500 rose 0.4 percent to 906.87 at 10:27 a.m. in New York. The Dow Jones Industrial Average increased 49.78 points, 0.6 percent, to 8,826.17. The Russell 2000 Index of small U.S. companies slipped 0.2 percent. Stocks in Europe and Asia rose today, trimming losses from last year’s record slump in the MSCI World Index, as investors speculated governments will step up efforts to revive the global economy and lower oil prices lifted retailers. The S&P 500 decreased 38.5 percent in 2008, the most since the 38.6 percent plunge in 1937 and sank to an 11-year low on Nov. 20. Volatility increased, with the index rising or falling 5 percent in a single day 18 times. Rebound from 11-Year Low The benchmark index for U.S. equities has climbed 3.7 percent this week, extending its rebound from an 11-year low on Nov. 20 to almost 20 percent. Stocks rallied as the government rescued Citigroup, President-elect Barack Obama pledged to stimulate growth with spending on infrastructure projects and the Federal Reserve cut interest rates to as low as zero percent to combat the worst financial crisis in seven decades. GM surged 32 cents to $3.52. The loans are part of $17.4 billion in financing that the Treasury has promised to GM and Chrysler LLC in a bid to avert a bankruptcy by either company. GM’s infusion will help the Detroit-based automaker pay suppliers as its cash dwindles. Citigroup climbed 9 cents to $6.80. Chief Executive Officer Vikram Pandit and Chairman Win Bischoff will forgo 2008 bonuses after the bank lost three-quarters of its market value and got a $45 billion U.S. bailout, Pandit said on Dec. 31 in a memo to employees. Starwood added $2.81 to $20.71 for the biggest gain in the S&P 500. The third-largest U.S. lodging company entered into a confidentiality agreement to give Equity Group Investments LLC the opportunity to top any third-party takeover bid, Starwood said in a regulatory filing. Manufacturing Report Stocks climbed even after a report showed manufacturing in the U.S. shrank in December at the fastest pace in almost three decades as the recession deepened and spread overseas. The Institute for Supply Management’s factory index fell to 32.2, less than forecast and the lowest level since 1980, from 36.2 the prior month, the Tempe, Arizona-based private group said today. Readings less than 50 signal contraction. The group’s price measure fell to the lowest level in almost six decades. Europe’s Dow Jones Stoxx 600 Index climbed 2.6 percent today, while the MSCI Asia Pacific excluding Japan Index increased 1.1 percent. South Korea’s president pledged to counter the economic slowdown, while India’s central bank after the close of trading cut interest rates for the fourth time in less than three months, extending the steepest set of reductions since 2000. Beer and Cigarettes At its lowest closing level of 2008 on Nov. 20, the S&P 500 was down 49 percent for the year and 52 percent from its Oct. 9, 2007, record of 1,565.15. The plunge came as more than $1 trillion in credit-related losses at global financial companies triggered the first simultaneous recessions in the U.S., Europe and Japan since World War II. Brewers and tobacco growers boosted by takeovers as well as discount retailers were about the only winners in 2008. Anheuser-Busch Cos. jumped 31 percent after InBev NV agreed to acquire the owner of Budweiser beer to create the world’s biggest brewer. Wal-Mart Stores Inc., the biggest retailer, and restaurant operator McDonald’s Corp. were the only two companies in the 30-stock Dow average that rose last year. Corporate profits have fallen seven straight quarters, according to the U.S. Bureau of Economic Analysis. Should earnings fall through the first half of 2009, as analysts surveyed by Bloomberg project, it would be the longest streak since the government began tracking quarterly data in 1947. The Chicago Board Options Exchange Volatility Index, known as Wall Street’s fear gauge, posted a 78 percent gain to 40 in 2008. The so-called VIX, a measure of how much investors are paying for insurance from stock declines in the options market, had never exceeded 50 before October. Its close of 80.86 on Nov. 20 was the highest in its 19-year history.

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