Third Quarter Kicks Off On Positive Note On Wall Street
Although the gains on Wall Street were marginal, stock market traders are of the opinion that investors are nonetheless encouraged by the gradual improvement which is seen as an indication that the recession is slowing down. Twenty-four of the thirty Dow stocks rose, with IBM leading the way, followed by Coca-Cola, 3M, Chevron and Exxon Mobil, revealing that Wednesday’s market gains were broad-based.
Although the last day of the second quarter saw stocks falling, it turned out to be the best quarter, percentage wise, that Wall Street has experienced in some time. For the period April to June, the Standard & Poor’s 500 gained 15.2 percent, a percentage increase which has not been experienced since the fourth quarter of 1998. The Dow Jones industrial average climbed 11% and the Nasdaq composite gained 20 percent, both being their best quarter since the second quarter of 2003. While these percentages are off a lower base, they are nevertheless encouraging.
As US automakers continue strategizing on how best to deal with the ongoing recession, General Motors interim CEO Fritz Henderson is seeking approval for plans to restructure the company to rid itself of burdensome contracts and commitments. Experts in the motor industry have voiced their doubts that Henderson is the right man to shake up GM management, bearing in mind that he has worked for General Motors for twenty-five years, much of which he has spent in a management position – on the management team that got the company into trouble in the first place. Meanwhile suppliers to the auto industry are starting to feel the pinch and a recent request by suppliers for up to $10 billion in government assistance was rejected by the Obama administration. Suppliers are concerned that this lack of assistance will result in a spate of bankruptcies. This fear has been exacerbated by the news that Lear Corporation, suppliers of auto seating primarily to General Motors and Ford Motor Co., is poised to file for Chapter 11 bankruptcy protection.