Stocks lower, awaiting news on car makers fate

When the Senate announced last night that they would not be able to pass legislation to help the auto companies, Asian markets & Dow futures sank. Asian markets were weak already, but dropped further to losses of 5-6%. Auto companies were hit hard. Toyota, shortly expected to be pronounced the #1 auto company in the world, was down 10%. The auto companies were lower because the auto suppliers are very much tied in with the auto companies. These suppliers which are also threatened, sell parts to Asian car companies. Dow futures were down 250 & sank to minus 330 later.

But today there is a ray of hope, auto companies may yet get help from the administration. The White House is behind the idea of helping the Big 3 & the Treasury is looking for a way to provide help. In the meantime, we have to let them work out details. After falling 170 on the opening, Dow has recovered to a loss of 94, decliners ahead of advancers 3-2 while NAZ is up 4.

•Treasury Says It's Ready to Assist Automakers Until New Congress Convenes


S&P 500 FINANCIALS INDEX is down only pennies, awaiting developments on the auto bailout. Given the fuzzy situation, the Alerian MLP Index is down 1, The Dow Jones REIT Index is up 3 from very depressed levels, Lehman High Yield Bond ETF is down pennies (it always seems to be down pennies at least) & the VIX is up almost 1 to 56½

Oil pulled back, wiping out most of yesterday's gains. Traders are mainly concerned with OPEC's meeting next week.

CLF09.NYM

..Crude Oil Jan 09

...44.72

.. 3.26 ......(6.8%)

In the other news dept, retail sales continues weak. Sales dropped 1.8% in Nov, slightly better than the ugly forecasts being used. But that provided little comfort, as this was the 5th straight month of declines. A terrible month for autos led the way down. Lower gas prices helped, but depressing news about job losses & threats of more losses are weighing down the public.

•U.S. Retail Sales Drop For Fifth Month on Auto Slump, Decline in Gasoline


The index of consumer confidence rose to 59.1 from 55.3 in Nov, but still very close to a multi year low. Lower gas prices provided only limited help when compared to dreary economic news, especially regarding the possible loss of employment.

•Consumer Confidence in U.S. Rises From 28-Year Low as Gasoline Prices Fall

I think the White House will come up with help to keep the auto companies alive. However any such aid will be only temporary. They still face huge major problems which need to be solved if they are to survive.