Stocks Advance; GMAC Receives Lifeline from Government, Lehman Wants More Time

INVESTOR GUIDE : Today's issue is sponsored by ACM:

Market Summary
Stocks moved higher on Tuesday after GMAC
received a lifeline from the government. The Dow Jones Industrial
Average added 184.46 points to end at 8,668.39. Broader stock
indicators also advanced nicely. The Standard and Poor’s 500 index
added 21.22 points and the Nasdaq added 40.38 points. Stocks advanced
early in the session after it was announced that the government would
extend a $5 billion lifeline to GMAC, LLC. The financing sector of
General Motors (GM: Charts, News, Offers)
will use the money immediately to extend financing options to some
customers that had previously been denied by the lender. By
mid-afternoon the market started to decline as investors reviewed a
report on consumer confidence. Investors looked beyond the report and
stocks continued to advance. In corporate news, Lehman Brothers
Holdings Inc. (LEH: Charts, News, Offers)
requested more time to file its Chapter 11 bankruptcy plan with a U.S.
bankruptcy court. The company said that the plan is complex and will
take longer than expected to draft. Market breadth was positive.
Winners topped losers by a 3 to 1 basis on the New York Stock Exchange.
U.S. light crude oil for February delivery fell $1.32 to $38.70 a
barrel after making a small advance in the previous session. The dollar
ended mixed against other major currencies.

Market News

The Treasury Department said that it will provide $5 billion to GMAC Financial Services LLC, the ailing financing arm of General Motors Corp., in a move that's expected to stave off a bankruptcy protection filing at the company but also severely limit GM's control over it. In exchange for the slice of the $700 billion bank rescue package, the government will receive preferred shares that pay an 8 percent dividend and warrants to purchase additional shares in return for the money, the department said. Treasury also said it will lend up to $1 billion to General Motors (GM: Charts, News, Offers) so that the company can purchase additional equity that GMAC is planning to offer as part of its effort to raise more capital. (Source: Yahoo! Finance) Full Story

Longtime investors in chipmaker Advanced Micro Devices (AMD: Charts, News, Offers) are used to disappointment -- why not end 2008 with another bleak signpost for the months ahead? The company reported late Monday in a Securities and Exchange Commission filing that it laid off 100 more workers than expected during its most recent quarter (a total of 600), which would also result in a charge of $70 million, $20 million more than previously projected. That's not the really disappointing part -- for investors, not for the additional 100 now without jobs -- and it even led one media outlet to post the unfortunate headline earlier Tuesday "Intel (INTC: Charts, News, Offers), AMD Lead Broad Advance by Chip Issues." (Source: TheStreet) Full Story

Home prices dropped by the sharpest annual rate on record in October and there are no signs the housing pain is over, according to a closely watched index released Tuesday. The Standard & Poor's/Case-Shiller 20-city housing index fell by a record 18 percent from October last year, the largest drop since its inception in 2000. The 10-city index tumbled 19.1 percent, its biggest decline in its 21-year history. Both indices have recorded year-over-year declines for 22 straight months. Prices are at levels not seen since March 2004. Prices in the 20-city index have plummeted more than 23.4 percent from their peak in July 2006. The 10-city index has fallen 25 percent since its peak in June 2006. (Source: Forbes.com)

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