Paulson To Automakers: No TARP For You

Wall Street was comfortably higher at midday Tuesday, as investors absorbed congressional testimony from Treasury Secretary Henry Paulson and Federal Reserve Chief Ben Bernanke.

Appearing before the House Financial Services Committee, the pair discussed the progress of the financial rescue efforts currently underway, and were asked whether action should be taken to prop up the ailing U.S. automotive industry. Paulson supported congressional aid for Detroit's automakers, but opposes the extension of the Troubled Asset Relief Program to inject capital directly into General Motors (nyse: GM - news - people ) or Ford Motor (nyse: F - news - people ). Rather, Paulson said the Bush Administration believes any assistance to the automakers should come from the Department of Energy, and focus on sustainability by creating requirements to produce more fuel-efficient vehicles. (See "On The Skids.")

Paulson and Bernanke were also grilled on the reversal of the TARP, which was initially proposed as a program to buy troubled mortgage-related assets off bank balance sheets but has since morphed into an investment vehicle to recapitalize financial institutions. The Treasury Secretary defended the program by arguing that the unpredictable nature of the ongoing financial crisis has required a flexible approach.

The major U.S. averages held onto morning gains during the hearing on Capitol Hill, with the Dow up 137 points, or 1.7%, to 8,411. The S&P 500 added 10 points, or 1.2%, to 861; and the Nasdaq inched 5 points, or 0.4%, higher, to 1,487.

Hewlett-Packard (nyse: HPQ - news - people ) gave the market a boost in the morning, offering preliminary fourth-quarter earnings that beat estimates and an outlook for the first quarter of 2009 that also came in better than expected. Shares of the computer maker were up $3.08, or 10.5%, to $32.42, to lead the advance on the Dow.

Yahoo! (nasdaq: YHOO - news - people ) shares were also substantially higher after the company announced founder Jerry Yang would relinquish the CEO title after a brief, albeit turbulent, tenure that included the company's rejection of a takeover approach from Microsft and a subsequent slide in its share price far below the offer level. The Internet portal, which now begins the search for a new chief executive, was up $1.37, or 12.9%, at $12.00. (See "Yang To Step Down As Yahoo! CEO.")