NEW YORK – Chrysler’s bankruptcy is testing Wall Street’s resilience.
After rising sharply in early trading Thursday, the Dow Jones industrial average pared its gains and traded up only about 2 points after President Barack Obama confirmed that Chrysler LLC will be going through bankruptcy. The proceedings will last up to 60 days.
The announcement was not a surprise to investors, but it sapped some of the optimism stoked by calming words from the Federal Reserve on Wednesday and a decline Thursday in last week’s jobless claims.
Jack A. Ablin, chief investment officer at Harris Private Bank, said the market had already been trying to factor in the possibility of a Chrysler bankruptcy. “Once, though, investors become face-to-face with that reality, they have a different reaction,” he said.
Still, he said the market was showing remarkable resilience considering its obstacles — the automaker’s bankruptcy, the government’s stress-testing of banks, and a potential swine flu pandemic.
Wall Street has been growing more confident that the U.S. economy, while not yet healthy, is nearing a bottom. The Dow is already up 25 percent from its 12-year low in early March.
In early afternoon trading, the Dow rose 2.46, or less than 0.1 percent, to 8,188.19. It was up more than 121 points in earlier trading.
Broader stock indicators also pared gains. The Standard & Poor’s 500 index rose 0.57, or 0.1 percent, to 874.21, and the Nasdaq composite index rose 15.98, or 0.9 percent, to 1,727.92.