By Anuj Gangahar in New York
Published: June 1 2009 14:14 | Last updated: June 1 2009 14:58
US stocks gained strongly at the opening bell on Monday even as General Motors filed for bankruptcy and a judge ruled in favour of a sale of most of Chrysler’s assets to Italian carmaker Fiat.
Shortly after the market opened in New York the S&P 500 index was 1.3 per cent higher at 931.26 while the Nasdaq composite was 1.4 per cent ahead at 1,799.22. The Dow Jones Industrial Average was 1.2 per cent higher at 8,600.72.
Dow Jones said that GM and Citigroup would be replaced in the Dow Jones Industrial Average by Cisco Systems and Travelers, respectively. Shares in both Cisco and Travelers, which was spun off from Citigroup in 2002, opened sharply higher.
General Motors filed for Chapter 11 bankruptcy protection in New York on Monday. Its shares were suspended on the New York Stock Exchange.
Over the next few hours, President Barack Obama and GM’s chief executive Fritz Henderson will seek to reassure workers, suppliers, dealers and car buyers that a leaner, reinvigorated GM will emerge quickly from a court-supervised restructuring.
GM’s bankruptcy filing occurred just hours after a US bankruptcy court judge in New York approved Chrysler’s sale of most of its assets to Fiat, the Italian carmaker.
Further boosting stocks were economic data showing the income of Americans rose unexpectedly in April.
Personal income rose at a seasonally-adjusted rate of 0.5 per cent compared with the month before, according to the Commerce Department. Income fell a revised 0.2 per cent in March from an original estimate of a fall of 0.3 per cent.
Personal consumption in April fell 0.1 per cent compared with the month before. Spending decreased a revised 0.3 per cent in March.
Oil climbed by more than $2 to a seven-month high, above $68 a barrel.
Shares in Ford were up 3.7 per cent at $6 after reports said it planned to increase production in the third quarter in a bid to gain market share while its rivals are bogged down in restructuring.
Copyright The Financial Times Limited 2009