Stocks lower despite rally
Fresh concerns about the financial sector dragged down the stock market again Tuesday, but a late rally staved off deeper losses.
Citigroup led the retreat after an analyst predicted that the company would take as much as $18 billion in mortgage-related write-offs this quarter. The banking giant’s shares also were weighed down by a large shareholder’s suggestion that Citigroup might be forced to raise additional capital. The stock fell 99 cents, or 4.3%, to $22.10, a nine-year low.
Investors had hoped that banks had taken care of all their write-downs tied to the sub-prime mortgage crisis in the third and fourth quarters of last year, said Alan Gayle, senior investment strategist at Trusco Capital Management in Richmond, Va.
“And we had some big write-offs,” he said. “But it looks like it’s spilling over to the first quarter.”
Financial stocks also were hurt by comments by Federal Reserve chief Ben S. Bernanke, who urged lenders to forgive some of the mortgage debt owed by homeowners who are at risk of foreclosure.
The Dow Jones industrial average, which was off more than 200 points at one point Tuesday, closed down 45.10 points, or 0.4%, to 12,213.80, while the Standard & Poor’s 500 gave up 4.59 points, or 0.3%, to 1,326.75. Winners topped losers by 2 to 1 on the New York Stock Exchange.
The Dow held above its one-year closing low of 11,971 on Jan. 22. The S&P; 500 dropped below its Jan. 22 closing low of 1,310.50 before rebounding.
The Nasdaq composite index eked out a gain of 1.68 points, or 0.1%, to 2,260.28.
The Russell 2,000 index of smaller companies fell 3.24 points, or 0.5%, to 680.98.
Treasury bond yields rose as stocks regained their footing. The yield on the benchmark 10-year Treasury note climbed to 3.6% from 3.56% late Monday. The dollar fell.
Oil, gold, copper and corn prices dropped after setting record highs Monday. Crude futures fell $2.93 to settle at $99.52 a barrel on the New York Mercantile Exchange.
An index of financial stocks in the S&P; 500 fell 0.8%, paring an early retreat of as much as 3.3%. Helping the sector rebound was a report of progress in talks on a rescue of bond insurer Ambac Financial.
JPMorgan Chase closed down 63 cents at $39.19, Bank of America dropped 40 cents to $38.78, and Morgan Stanley slipped 23 cents to $41.35. Wachovia fell 93 cents to $29.48.
Ambac rose 78 cents, or 7.9%, to $10.72, while MBIA, the No. 1 bond insurer, rose 36 cents, or 2.9%, to $12.98.
Shares of energy, mining and agricultural companies slumped after commodity prices retreated.
Energy stocks in the S&P; 500 lost 1.5%. ConocoPhillips fell $1.94 to $81.50. Exxon Mobil dropped $1.06 to $86.69. Oilfield-service firm Schlumberger lost $2.43 to $84.55.
Among mine operators, copper giant Freeport-McMoRan sank $4.52, or 4.4%, to $98.93. Gold producer Newmont Mining slid $2.18, or 4.2%, to $50.20.
Corn’s tumble sent seed producer Monsanto down $6.91, or 5.8%, to $111.72.
In other market highlights:
Amazon.com shot up $2.91, or 4.7%, to $65.34 on comments by its finance chief on the retailer’s 2008 prospects.
Jackson Hewitt Tax Service plunged $6.61, or 33%, to $13.68 after the company said results were hurt by a slow start to the tax season and reports of a Justice Department probe.
Barr Pharmaceuticals jumped $3.80, or 8.3%, to $49.47 after it was cleared by a federal court to launch a generic version of Bayer Schering’s oral contraceptive Yasmin.
Applied Materials climbed $1.44, or 7.6%, to $20.32 after the supplier of equipment for making computer chips signed a $1.9-billion contract
Overseas, key stock indexes fell 0.9% in Britain, 2.2% in Germany and 1.4% in France. Shares in Japan ended mostly flat.
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Times wire services were used in compiling this report.
