U.S. Markets Rally Late, Finish On Highs

December 2, 2008 5:02 p.m. EST

New York, NY (AHN) - Stocks participated in a volatile session but were able to stage a late rally as potential for an auto industry bailout gave investors optimism. All three major indices finished higher by more than 3 percent.

Both General Motors and Ford presented new plans for government funding to Congress on Tuesday. While GM said it will need $12 billion in loans to continue operations; Ford said it has enough cash to operate through 2009 and might be able to restructure without government funding.

The CEOs from both automakers said they will take an annual salary of one dollar if government loans were used.

The Dow Jones Industrial average rose 270 points or 3.3 percent. 28 of 30 Dow components finished the session higher. General Electric led the Dow with a 13.6 percent gains after the conglomerate said it will maintain its dividend in 2009 and guided fourth quarter earnings in-line with analyst estimates.

The S&P 500 added 32 points or nearly 4 percent as all 10 major economic sectors rose on Tuesday. Financials rebounded from Monday's massive loss to gain 7.9 percent on the session, the best move of all the sectors.

Tech rose as well with the Nasdaq Composite adding 52 points or 3.7 percent. Big-cap tech was strong as the Nadaq composite rose 3.6 percent.

However, Research in Motion, down 6.2 percent weighed on the index as shares fell after rival Palm Inc. released a revenue warning.

Major automakers released their November U.S. auto sales data on Tuesday. General Motors and Chrysler both reported declines exceeding 40 percent. Ford posted a 31 percent decline while Toyota saw sales drop 34 percent.

In corporate news, Sears Holdings posted a larger than expected third quarter loss as same-store sales dropped 9 percent. Staples reported a 43 percent drop in third quarter earnings, but the decline was slightly less than analysts expected.

Wednesday's session will see the release of November ADP Employment data along with a revise productivity number for the third quarter.