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Wall Street drifted into the dusk on Friday, as investors closed out positions ahead of a holiday-shortened week and mulled the much-anticipated rescue plan for Detroit's auto industry.

The U.S. Treasury will use $17.4 billion of its Troubled Asset Relief Program piggybank on bridge loans for General Motors (nyse: GM - news - people ) and Chrysler designed to keep the automakers afloat while they restructure. The money will be doled out in two parts, an immediate $13.4 billion outlay followed by another $4.0 billion in February, with the goal of putting the car companies on a path to survival by the end of March. (See "A Band Aid Or A Bailout?")

GM shares jumped 15.3% but the broader market stalled Friday. The Dow Jones industrial average fell 26 points, or 0.3%, to 8,579, losing 0.6% on the week, and is down 35.3% in 2008. The S&P 500 gained 2 points, or 0.3%, to 888, adding 0.9% for the week to shave its year-to-date loss to 39.5%; and the Nasdaq climbed 12 points, or 0.8%, to 1,564 Friday, to lock in a 1.5% five-day gain and trim its 2008 decline to 41.0%. Ford Motor (nyse: F - news - people ), which requested a credit line from the government but not a bridge loan, gained 1.8% late in the session.

The banking sector was under the gun after Standard & Poor's cut its long-term debt ratings on a dozen firms. Morgan Stanley (nyse: MS - news - people ) and Citigroup (nyse: C - news - people ) were among the hardest hit of the companies affected by the cut, down 4.1% and 5.9%, respectively, which S&P attributed to continued pressure on complex financial institutions and the likelihood of ongoing volatility in funding markets. The SPDR KBW Bank (nyse: KBE - news - people )exchange-traded fund was off 1.5% near the close.

Traders in the energy pits sent oil prices lower Friday, as crude dropped $2.35, to $33.87 a barrel. The Organization of Petroleum Exporting Countries announced a 2.2 million barrel production cut on Wednesday, but move has been greeted with skepticism, as market watchers question whether the output decrease can overcome plunging demand caused by the global economic downturn. United States Oil Fund (nyse: USO - news - people ), an exchange-traded vehicle that tracks crude and other products, gained 0.9% though, as prices ticked higher in electronic trading after the January crude contract expired at day's end. (See "Market Judges OPEC Goal A Mere Paper Cut.")

Long-time subscribers to Forbes/Lehmann Income Securities Investor will recall our various moans and groans about the bond market and its lack of any reasonable returns when compared to similar products among the preferreds. Well, things have changed, and this time for the better.

In fact, yields reached their bottom in October when AAA yields were at 6.9% and BBB at 10.2%. These are the kinds of returns we were used to seeing in preferreds last year--and then for much lower quality issuers.

At the end of November, the returns for AAA stood at 5.96% and BBB at 9.99 but with one big difference. U.S. Treasuries have sunk to a yield of only 2.84%, a leap of faith for a 10-year instrument that faces a Federal Reserve Bank, which is still inflating its balance sheet from a recent $800 billion to now $3 trillion and counting.

Special Offer: Richard Lehmann's portfolio of safe, conservative, high-yield fixed-income securities has beaten the stock market for years. Given the market pullback, some of his recommendations are now providing yields as high as 30%. Click here for his current buy list.

It takes a really scared investor to think he is safer lending the Treasury money at 2.84% versus, say, General Electric (nyse: GE - news - people ) at 7%. Are investors so focused on a complete financial meltdown that they choose to ignore the greater threat of inflation over a 10-year period. Oh sure, you say, they can always sell the 10-year Treasuries when the crisis passes, but then who do you think will buy them at this yield? Certainly not Mr. Market.

In any case, this month's Forbes/Lehmann Income Securities Investor features the first of, we hope, many more months in which we can recommend a complete complement of bonds. Well, not exactly complete in the sense that we are still reticent to recommend single B and CCC-rated issues despite their mouth-watering yields.

Secure your retirement with income from bonds, preferreds and convertibles. Click here to learn how with Forbes Lehmann Income Securities Investor.

One of Yahoo Inc.'s largest shareholders, Ivory Investment Management LP, is urging the Internet company to pursue a sale of its search unit to Microsoft.

In a letter to the company's board, the investment firm proposed a deal Wednesday in which Microsoft (nasdaq: MSFT - news - people ) would acquire Yahoo (nasdaq: YHOO - news - people )'s search engine and Yahoo would retain 80 percent of revenue generated by search queries on its own site.

Ivory said Yahoo could get about $15 billion from Microsoft for the search platform alone, a deal it said would give shareholders a value of $24 to $29 per share, or more than double Yahoo stock's closing share price Tuesday of $12.19.

Yahoo shares rose 62 cents, 5.1 percent, to $12.81 in morning trading Wednesday.

Yahoo Chief Executive Jerry Yang said recently that he would resign, a response to shareholder discontent that brewed after Yahoo rebuffed a $47.5 billion takeover offer from Microsoft for the entire company. Before stepping down, Yang said he was still open to some kind of a deal with Microsoft, after antitrust concerns sank Yahoo's planned advertising partnership with Google Inc. (nasdaq: GOOG - news - people )

Microsoft CEO Steve Ballmer has said a takeover of Yahoo is off the table but has expressed interest in the company's search business.

In the letter Wednesday, Ivory took Yahoo's board to task for not seeking a deal with Microsoft more aggressively and accused the company of ignoring shareholder interests. The firm holds 21.4 million, or about 1.5 percent, of Yahoo's shares.

The Forbes.com Investor Team tries to build a portfolio that will rebound strongly in 2009.

The pounding of the U.S. economy and stock markets seems to have shaken the support of key "investor class" voters for the Republican Presidential nominee, Arizona Senator John McCain.

In a nationwide telephone poll of 1,208 people taken from Oct. 26-30 by Reuters/C-SPAN/Zogby, McCain edged the Democratic nominee, Illinois Senator Barack Obama, among those who identified themselves as "investors" by 50.4% to 43.8%, with 5.8% "not sure." That was down sharply from a 15-point lead for McCain in a similar poll taken a month earlier. (Among non-investors, Obama led 56% to 36.1% in the most recent survey.)

"[The data] underscores more than anything else how much the financial crisis hurt McCain," says John Zogby, founder of the Utica (N.Y.)-based polling firm Zogby International. "In response to the crisis, McCain was erratic, frantic, and misspoken."

A Building Block for Bush

The good news for McCain? He seems to have recovered a bit since the darkest days of the financial crisis. A poll taken on Oct. 21, while stocks were at their most volatile, had him tied with Obama among investors.

Clearly, the investor class—which many pollsters define as those who have more than $5,000 invested in the stock market—is critical to a McCain victory. About 35% of voters belong to that group, and it was a key building block of George W. Bush's two victories, especially in 2004, when Bush won the support of investors by a wide margin over Democrat John Kerry. "If McCain doesn't win it—and win it big—he loses the election," says Zogby.

Candidates on both the Republican and Democrat sides aimed their pitches at this group early on, whether it was McCain's vow to maintain the Bush tax cuts or Senator Hillary Clinton (D-N.Y.) and Obama's promise to limit capital-gains tax increases. In February, BusinessWeek revisited some of the investor-class voters (BusinessWeek, 2/14/08) we profiled in September 2004. We found they had done well in the intervening years but were just beginning to feel the pinch of the downturn in home prices and economic growth.

No Great Faith in Either Candidate

McCain's recent recovery may reflect his pounding at Obama over tax plans. He altered his tax plan on Oct. 31, saying for the first time that he would like to slash capital-gains taxes in half on a permanent basis, and not just for the next two years, as he'd previously promised.

Pat Consolmagno, an 87-year-old retiree in Englewood, Fla., seems typical of those investors who are sticking with McCain. She voted for Bush in 2004 and is adamantly backing the Republican candidate this cycle. Consolmagno and her 90-year-old husband, Joe, live off the roughly $80,000 they get from earnings on their mutual funds and savings, Social Security, and a Chrysler pension. She says their investments "are not worth what they were." But she doesn't believe the financial meltdown is the fault of one political party, and doesn't trust Obama to solve the problems.

"Obama? I don't think he's got a clue," she says. "I don't think either [candidate] is a genius when it comes to the markets; we're just sitting here waiting to see what happens."

Skepticism of Republicans

McCain seemed to have a strong hold on investors' loyalty early in the fall, as he promoted his "maverick" image and tried to distance himself from Bush. But after the implosion of AIG (AIG) and Lehman Brothers, and the ensuing debate about a Wall Street bailout, McCain's lead began to shrink.

Investors in general have been more skeptical of the Republican Party (BusinessWeek, 4/24/06) since 2006. At that time, investors polled by Zogby expressed uneasiness with President Bush's handling of Hurricane Katrina, the Iraq war, and the deficit. While Bush received the votes of 61% of investors in 2004, he had slid to a 43% job-approval rating by 2006, according to Zogby.

"The Republican Party brand has clearly been hurt," says Dan Clifton, a Washington-based analyst with Strategas Research Partners, a New York investment research firm. Clifton points out that as the financial crisis hit in earnest at the end of September, McCain's luck began to change.

"Obama stood up with American flags and economic advisers saying, 'I know you are hurting. Help is on the way,'" says Clifton. "He offered solace and guidance while McCain offered confusion."

Investors were undeniably nervous heading into Nokia's third-quarter earnings release on Oct. 16. Against a global backdrop of volatile trading in stock markets, shares in the Finnish mobile-phone giant had lost nearly a third of their value in the past two months—outpacing a 24% decline for the S&P Europe 350 index over the same period.

Some of the blame fell on a Sept. 5 warning from Nokia (NOK) that it expected to lose market share and report lower profits (BusinessWeek.com, 9/5/08) for the quarter. But investors also worried that the ongoing global economic turmoil could pull the rug out from under Nokia's sales—a concern now facing the broader consumer electronics industry as it heads into the crucial holiday season (BusinessWeek.com, 10/16/08).

Yet when the third-quarter results finally were revealed, showing a 5% year-over-year decline in revenues and 30% drop in net income, investors were sufficiently gratified to drive up Nokia's New York-traded shares by nearly 10%. That such soft numbers provoked a relief rally indicates how pessimistic shareholders were. "The fact that guidance remained by and large unchanged gave some comfort to the market," says Richard Windsor, a London-based technology analyst with brokerage Nomura Securities.

Consumers Are Still Buying Handsets

It's not merely a matter of seeing the glass as half-full. Though revenues, at €12.24 billion ($16.48 billion) came in 3.9% shy of market expectations, earnings per share were spot on the mark, gross profit margins for handsets grew slightly, and operating margin was better than in the previous quarter. In other words, Nokia wasn't even close to a meltdown: In a tough market environment, the company managed to keep profitability on track despite a decline in volume.

More important, Nokia reassured the market that there's no wholesale collapse taking place in handset demand. Its own unit shipments in the quarter grew by 5%, even as revenues slipped, and executives repeated their prediction that the mobile-phone market as a whole will grow 10.5% this year, to 1.26 billion units. That implies 14% unit growth in the fourth quarter compared to the third—somewhat lower than historical norms, but still a huge vote of confidence in consumer spending at a time when many indicators are pointing downward. Nokia promises to maintain or grow its estimated 38% third-quarter market share in the last three months of the year.

To be sure, there are trouble spots. Sales in Europe—traditionally Nokia's stronghold, although China is now its largest single market—fell by a worrisome 5.5% vs. last year's third quarter. (Sales in the U.S. were even worse, down 16.7%, but that was due primarily to the company's exit from CDMA phones; units were flat vs. the second quarter.) "The financial crisis has affected U.S. and European markets," said Nokia Chief Executive Olli-Pekka Kallasvuo in an interview.

Cheaper Models Are Selling Better

At the same time, Kallasvuo noted, "many economies are still experiencing rapid GDP growth, even as we speak." The proof is in the numbers: Year-over-year unit sales growth in Latin America was 14.6%, while the Asia-Pacific region, excluding Greater China, grew 13.9% and the Middle East and Africa climbed 11.4%. These aren't piddling markets, either: The three regions together accounted for 56% of Nokia's total volume.

Share prices fell in every industry and for each of the 30 stocks in the Dow Jones industrial average, down 7.3 percent (By Jin Lee -- Bloomberg News)

By Renae Merle, Michael A. Fletcher and Neil Irwin

Washington Post Staff Writers
Friday, October 10, 2008; Page A01

Fear and foreboding took hold on Wall Street yesterday, as the stock market again plunged and investors became convinced that the nation is on the verge of a deep and prolonged recession. The rout continued in Japan, where stocks plummeted in early trading.

The government took steps toward an extraordinary public investment in U.S. banks and General Motors stock fell to its lowest price since 1950 on fears it will not be able to weather the downturn. Share prices fell across every industry and for each of the 30 stocks in the Dow Jones industrial average, which was down 679 points, or 7.3 percent, to 8579.19.

But the plummeting stock market could not be blamed on any single piece of horrible news -- there were no additional bank failures or government bailouts or corporate bankruptcies.

"I've never seen a panic like this," said David Wyss, chief economist at Standard & Poor's. "I've seen stock market drops, but not an overall panic."

The broad Standard & Poor's 500 fell 7.6 percent, the seventh consecutive day of misery on Wall Street. The index has now fallen 42 percent from its all-time high one year ago yesterday and 22 percent this month alone. Stocks are on track for their worst calendar year since 1937.

Fear from Wall Street flooded into Asia on Friday, where markets were dramatically lower in early trading. Japan's benchmark Nikkei average plunged more than 10 percent, Australia markets slid more than 7 percent and South Korea stocks were down about 8 percent.

ear from Wall Street flooded into Asia on Friday, where markets were dramatically lower in early trading. Japan's benchmark Nikkei average plunged more than 10 percent, Australia markets slid more than 7 percent and South Korea stocks were down about 8 percent.