Wall Street zigzags on first day of 3rd quarter

Source: Agencies  |   2008-7-2  |     ONLINE EDITION

WALL Street began the third quarter with an erratic session and modest gain yesterday after a mix of news made it clear the US is still deep in economic problems but may have some positive trends, including some better than expected sales for General Motors Corp.

Prices rose early in the session, then turned sharply lower for much of the day and then recovered in late afternoon. The uneven performance was not surprising, some bargain hunting was to be expected after a dismal first half, and in particular, a dismal June.

The session brought more discouraging news for investors: Oil rose again toward record high levels, a report showed that US manufacturers are still under duress and Ford Motor Co. said its June sales tumbled. This all raised the market's fears that the economy, still reeling from soaring commodities prices and the lingering credit crisis, is not any closer to turning around.

Yet GM's sales, while falling 18.2 percent during June, came in above analysts' forecasts, retaining Detroit's lead over Toyota Motor Corp and sending the automaker's shares higher. GM's news was in sharp contrast to the dismal results reported earlier by Ford Motor Co, where a 27.9 percent plunge in sales for the month sent the company's stock to its lowest point in decades.

And while the Institute for Supply Management had an overall disappointing report on manufacturing in June, it also reported strong exports for US factories.

"This market is craving anything positive," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. He said because the market has sold off so much in recent days, traders took GM's weak but better-than-expected sales as a buying opportunity

The Dow Jones industrial average, down more than 150 points earlier, rose 32.25, or 0.28 percent, to 11,382.26, while the Standard & Poor's 500 index rose 4.91, or 0.38 percent, to 1,284.91. The Nasdaq composite gained 11.99, or 0.52 percent, to 2,304.97.