U.S. Stocks Advance

U.S. stocks rose, recouping yesterday’s losses, on speculation the Federal Reserve will cut its main interest rate to a record low and inject credit markets with cash to halt the worst recession in a quarter century.

General Electric Co. and Citigroup Inc. added more than 2.3 percent as traders bet the Fed will cut its benchmark rate to as low as 0.25 percent. General Motors Corp. rose as much as 4.2 percent on optimism the Treasury will adopt a plan to save the car industry, while Goldman Sachs Group Inc. gained 7.8 percent even after posting a wider-than-estimated loss.

The Standard & Poor’s 500 Index added 1.5 percent to 881.89 at 10:31 a.m. in New York. The Dow Jones Industrial Average gained 90.08 points, or 1.1 percent, to 8,654.61. The Russell 2000 Index of small U.S. companies increased 2.1 percent. The Fed’s Open Market Committee will announce its decision on interest rates and monetary policy at around 2:15 p.m. in Washington.

European stocks rose as speculation the Federal Reserve will reduce interest rates to the lowest level on record overshadowed concern the deepening recession will drag down profits at basic-resource companies.

Europe’s Dow Jones Stoxx 600 Index increased for the first time in four days, adding 0.6 percent to 198.61 at 2:49 p.m. in London. Fed Chairman Ben S. Bernanke has indicated he may take new steps to prevent the worst recession in a quarter century from turning into a depression.

Asian stocks fell, led by commodity producers and consumer electronics makers, on concern the deepening global recession will stifle earnings growth.

Japan’s Nikkei 225 Stock Average dropped 1.1 percent to 8,568.02. Daiwa Securities Group Inc., the country’s second- largest brokerage, slumped 5.5 percent after saying it may raise as much as $1.1 billion in new capital.

Chinese stocks gained, led by a 7.3 percent advance in Poly Real Estate Group Co., after the country’s central bank Governor Zhou Xiaochuan said he may cut interest rates this month.

TradingEconomics.com, Bloomberg
12/16/2008 7:42:22 AM