Wall Street rebounds despite GE rating cut
Wall Street extended its rally into a third day as investors took in stride a cut in General Electric Co.’s credit rating.
Standard & Poor’s lowered GE’s top rating one notch because of problems at the company’s lending arm. However investors were relieved that S&P said it was not considering further credit downgrades for the blue-chip company, the oldest member of the Dow Jones industrials.
GE stock jumped more than 13 percent, helping drive the Dow back above the 7,000 mark.
“It’s oddly encouraging” that GE maintained a stable rating after its downgrade, said Kim Caughey, equity research analyst at Fort Pitt Capital Group. S&P and other ratings services have been trying to act more aggressively following criticism over the past year for failing to identify risks in subprime mortgage investments, she noted.
Another big gainer in the Dow was General Motors Corp., which has been borrowing money from the government to stay in business. GM’s chief financial officer said the company will not need the $2 billion loan for March it previously requested. GM rose nearly 13 percent.
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This article was orignally posted on Yahoo Finance