By Nick Godt
U.S. stocks finished mostly ahead on Tuesday, led by energy and financial shares, with investors drawing some cheer by word that the breakup of Citigroup Inc. would likely go beyond an expected joint venture with Morgan Stanley.
As with the broader market, shares of Citigroup (C) turned higher, up 5.4% as word circulated that the breakup of the company is likely to go beyond a widely expected brokerage joint venture with Morgan Stanley (MS). .
"Citi continues to be a bellwether, now we're all waiting to see what happens. And, Citi seems quite rational about the fact it has to reconfigure itself," said Tim Speiss, head of wealth management division at Eisner LLP.
The Dow Jones Industrial Average (DJI) ended at 8,448.56, losing 25.41 points, or 0.3%, and down for a fifth straight session.
Sixteen of the Dow's 30 components finished lower, the declines led by Bank of America Corp. (BAC), off 6.8%.
Also weighing, Alcoa Inc. (AA) shares fell 5.1% after the aluminum producer late Monday said it lost $1.2 billion in the fourth quarter.
"Alcoa got things kicked off in fine fashion last night missing even the lowest estimates, which sets the stage for an absolutely terrible report for them next time out as aluminum prices have gone nowhere but down," said Dan Greenhaus, an analyst in the equity strategy group at Miller Tabak.
Elsewhere on the Dow, shares of General Electric Co. (GE) slumped 5.6% after Barclays said the firm's quarterly results could be at the lower end of estimates and that Moody's could then cut its ratings outlook on GE's debt to negative.
Shares of J.P. Morgan Chase (JPM), rose 5.8%. The bank said late Monday it plans to report quarterly results on Thursday, almost a week ahead of schedule.
Crude-oil futures rose for the first session in six as Saudi Arabia signaled it would cut production by more than the target set by the OPEC cartel in December. Crude for February delivery ended up 19 cents at $37.78 a barrel on the New York Mercantile Exchange.
The S&P 500 index (SPX) gained 1.53 points, or 0.2%, to 871.79, while the Nasdaq Composite (RIXF) climbed 7.67 points, or 0.5%, to 1,546.46.
On the New York Stock Exchange, 1.3 billion shares traded, with advancers outpacing decliners 8 to 7. On the Nasdaq Stock Market, 801 million shares traded and advancers ran ahead of decliners 7 to 6.
In an early speech, Federal Reserve Chairman Ben Bernanke called the timing and strength of the global economic recovery "highly uncertain," saying President-elect Barack Obama's stimulus plan could boost economic activity, but a recovery won't stick unless other steps are taken to stabilize the financial system.
The next step in the battle against the financial market crisis is to get toxic assets off the balance sheets of financial institutions, Bernanke said, which may require government outlays above the $700 billion fund set up by Congress. .
Treasury prices were down as Bernanke repeated that the central bank could buy longer-term Treasurys to keep loan rates low.
On the economic front, the trade deficit plunged in November to $40.4 billion.
The dollar fell against the Japanese yen.
Japanese stocks were rattled Tuesday, with the Nikkei 225 shedding 4.8% after a three-day hiatus, led lower by electronics makers like Sony. The FTSE 100 dropped, led lower by metals producers and banks. Data showing Chinese exports falling 2.8% in December hurt the mining sector.
"I'm still underweight [on] banks and I think that we haven't yet seen the second wave of bad debt problems from normal loans to people losing their jobs. I think that banks could continue to struggle for some time," said Andrew Lynch, portfolio manager at Schroder Investment Management in London.
Still, three-month dollar Libor dropped to 1.09% from 1.16%, the lowest rate since June 2003, showing that at least interbank lending has picked up.
Earnings news was largely negative. Lexmark International Group Inc. (LXK) shares fell 12% after the printer maker warned on profit. .
Elsewhere, shares of Liz Claiborne Inc. (LIZ) slumped 13% after the retailer reduced its credit facility to $600 million from $750 million. .
Elan Corp. (ELN) dropped 2.1% after the Irish drugmaker put itself on the block, hiring Citigroup as an adviser. .
Earnings worries, notably in the financials sector, pushed U.S. stocks to 2009 lows on Monday. The Dow Jones Industrial Average dropped 125 points, the S&P 500 lost 20 points and the Nasdaq Composite fell 32 points.
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Publié le 13 janvier 2009 Copyright © 2009 Dowjones