Investors returned from a three-day weekend and pushed stocks solidly into the green. General Motors Corp. (NYSE:GM) was in focus as it negotiates concessions needed ahead of a June 1 restructuring deadline. Meanwhile, banking stocks, including J.P. Morgan Chase & Co. (NYSE:JPM), Wells Fargo & Co. (NYSE:WFC) and PNC Financial Group (NYSE:PNC), jumped on an accounting rule, which can help bolster their bottom lines. Overall, the Dow rose 2.37%, or 196.17, to 8,473.49, while the Nasdaq increased 3.45%, or 58.42, to 1,750.43.
Shares of GM finished up a penny, or 0.70%, to $1.44 as it tries to strike deals that would lower costs ahead of its restructuring deadline. Media reports say that the United Auto Workers have come to an agreement with GM that will lead to the union owning 17.5% of the company. The union would also receive $6.5 billion of preferred shares and a $2.5 billion note to fund a trust that will take over retiree healthcare costs starting next year. But GM still has not come to terms with bondholders who have until midnight Tuesday to decide whether to agree to give up $27 billion in debt for a collective 10% stake in the restructured company.
Meanwhile, J.P. Morgan finished up $2.13, or 6.19%, to $36.54; Wells Fargo closed up $1.34, or 5.51%, to $25.65; and PNC Financial increased $2.07, or 5.03%, to $43.25. Investors were celebrating an accounting rule that enables the transformation of their bad loans inherited from recent acquisitions into income. All three banks have acquired ailing financials over the last nine months. According to Bloomberg, the windfall gain comes through the purchase accounting rule, which gives the banks "accretable yield, the difference between the value of the loans on the banks' balance sheets and the cash flow they're expected to produce." - Gerald Magpily
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