Wall Street rebounds

Wall Street has managed its second straight comeback, but the rebound was more a sign of the market's turmoil than strength.

Stocks closed moderately higher Friday after an erratic session that had investors tussling with concerns about the ongoing problems in the banking industry in response to more billion-dollar losses at Citigroup Inc. and Bank of America Corp. Yet investors were also heartened by plans for both banks to restore themselves to profitability, and they were also willing to place bets on a range of consumer and industrial stocks.

It's that tug of war between problems and promise," said Alan Gayle, senior investment strategist at RidgeWorth Investments. "I think there is a bit of a sigh of relief that there is assistance coming for Citi and Bank of America, but it seems like there is an ongoing need for this assistance."

The companies' fourth-quarter losses -- Citi said it lost $8.29 billion, while Bank of America lost $2.39 billion -- were sobering reminders that the sagging economy is aggravating the problems that began with the mortgage crisis in 2007.

Still, the market drew some reassurance from the fact that Bank of America reached a deal late Thursday to receive an additional $20 billion in capital from the government. The bank will also receive guarantees to cover up to $118 billion in losses on loans and securities backed by residential and commercial real estate as it incorporates recently acquired Merrill Lynch & Co. into its operations. Bank of America's deal with the government is similar to one Citigroup reached with the government last fall.

Meanwhile, Citigroup, among the hardest hit by the ongoing credit and mortgage market turmoil, said it plans to separate its traditional banking business from its riskier operations. Earlier in the week, Citi agreed to sell a majority stake in its brokerage business to Morgan Stanley as it looks to streamline and shed assets.

Amid the uncertainty about financials, investors were buying consumer stocks like Wal-Mart Stores Inc., McDonald's Corp. and Procter & Gamble Co. Some tech stocks were among the gainers, including Intel Inc. and Microsoft Corp. After two weeks of selling, many stocks are looking much more attractive.

The Dow Jones industrial average rose 68.73, or 0.84 percent, to 8,281.22. The Dow was down 103 points in early afternoon. On Thursday, it recovered from a 205-point loss to close up 12.35; before its rebound, the Dow fell below 8,000 for the first time since Nov. 21.

The Standard & Poor's 500 index rose 6.38, or 0.76 percent, to 850.12, while the Nasdaq composite index rose 17.49, or 1.16 percent, to 1,529.33.

The indexes were down for the week, the result of selling in response to weak economic data and fears that fourth-quarter earnings reports, which begin next week in earnest, will point to a prolonged recession.

For the week, the Dow fell 3.7 percent, the S&P 500 lost 4.5 percent and the Nasdaq skidded 2.7 percent.

"We continue to see a tug of war between what has been some really bad economic data in recent weeks and optimism that the economy and financial markets are likely to stabilize and improve as we head through 2009," said Michael Sheldon, chief market strategist at RDM Financial. "There clearly are a lot of crosscurrents in the market."

Alexander Paris, economist and market analyst for Chicago-based Barrington Research, said the price swings seen in the past few days are likely to continue until all the earnings data is in.
"We're going into a test of the market, given the bad numbers coming out," Paris said. "It's a battle between sentiment and ugly fundamentals."

John Merrill, chief investment officer of Tanglewood Wealth Management, said the market will be eyeing results outside the financial industry to see if banking troubles are seeping further into the broader economy. If non-financials can show some growth, it could restart the late 2008 rally that stalled in the first week of January.

"There's no sustained buying," Merrill said. "The follow through just isn't there."
Some of Friday's price movements were exacerbated by the expiration of stock options.
Bank of America shares tumbled $1.14, or 13.7 percent, to $7.18. Citi fell 33 cents, or 8.6 percent, to $3.50.

Steven Goldman, chief market strategist, Weeden & Co., said Bank of America was down in part over concerns that government financial support will diminish shareholders' stake in the company.

"Bank of America equity holders have a new partner and are being diluted," Goldman said, adding that the bank cut the quarterly dividend to 1 cent per share, making it less attractive, and will have to cede some managerial rights to the government.

Wal-Mart rose 21 cents to $51.56, McDonald's rose $1.69 to $59.67 and Procter & Gamble rose 27 cents to $57.73. Intel rose 45 cents $13.74 and Microsoft gained 47 cents to $19.71.

The market had little reaction to the government's latest reports showing the economy remains weak.

The Labor Department said the consumer price index fell 0.7 percent in December as energy prices slid. Economists polled by Thomson Reuters forecast a 0.9 percent drop. Meanwhile, the Federal Reserve said industrial production from the nation's factories, mines and utilities fell a larger-than-expected 2 percent in December. Economists expected a 1 percent.

Advancing issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where consolidated volume came to 5.92 billion shares, down from 6.84 billion Thursday.
The Russell 2000 index of smaller companies rose 3.83, or 0.83 percent, to 466.45.

Crude oil for March delivery fell 97 cents Friday to settle at $42.57 on the New York Mercantile Exchange. The February contract, which expires Tuesday, rose $1.11 to settle at $36.51 a barrel in very light trading. The dollar fell against other major currencies, while gold prices rose.

Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.34 percent from 2.20 percent late Thursday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.11 percent from 0.10 percent.

Overseas, Japan's Nikkei stock average rose 2.6 percent. Britain's FTSE 100 gained 0.9 percent, Germany's DAX index rose 0.7 percent, and France's CAC-40 was rose 0.7 percent.

For the week, the Dow Jones industrial average fell 317.96, or 3.70 percent, to close at 8,281.22. The Standard & Poor's 500 index lost 40.23, or 4.50 percent, to close at 850.12. The Nasdaq composite index slid 42.26, or 2.70 percent, to 1,529.33.

The Russell 2000 index, which tracks the performance of small company stocks, fell 14.85, or 3.1 percent, to 466.45.

The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted index that measures 5,000 U.S. based companies -- ended at 8,603.21, down 382.59 points, or 3.72 percent, for the week. A year ago, the index was at 13,308.47.

Stocks Head to Higher Open

Stocks were poised to open higher Monday after several reports of potential corporate deals, including speculation Washington Mutual Inc. will get a $5 billion investment from private equity firms.

The nation's largest thrift is in talks with buyout shop TPG Inc. about a possible capital injection, according to The Wall Street Journal. The company, which has suffered big losses tied to subprime mortgages, would become the latest U.S. financial institution to reach such a deal.

In addition, Microsoft Corp. gave Yahoo Inc. a three week deadline to agree to a takeover, or Microsoft would launch a proxy fight for control of the company. Yahoo said Monday the deal isn't in the best interests of its shareholders, and called the proxy threat counterproductive.

And Swiss pharmaceutical maker Novartis AG said it will spend about $38 billion in a two-step bid for a majority stake in U.S. eye-care company Alcon Inc.

Earnings season unofficially begins after the closing bell when Alcoa Inc., the world's third-largest aluminum producer, is scheduled to release first-quarter results.

Dow Jones industrial average futures rose 69, or 0.70 percent, to 12,679. Standard & Poor's 500 index futures advanced 11.90, or 0.87 percent, to 1,383.80. Nasdaq 100 index futures rose 15.75, or 0.84 percent, to 1,885.50.

Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.52 percent from 3.47 percent late Wednesday.

Light, sweet crude rose $1.16 to $107.39 in premarket electronic trading on the New York Mercantile Exchange. Gold was higher, and the dollar was mixed against other major currencies.

There were no major economic reports scheduled to be released during the session.

Overseas, Japan's Nikkei stock average rose 1.18 percent. Britain's FTSE 100 added 0.95 percent, Germany's DAX index rose 0.32 percent, and France's CAC-40 added 1.13 percent.

Oil Prices Steady

Oil Is Steady After Talk of OPEC Cuts



Oil price were steady Monday in Asia, rising slightly after further hints that OPEC may cut production if global supplies continue to rise amid forecasts for slower growth in demand.



The Organization of Petroleum Exporting Countries has trimmed its demand forecasts for this year by 100,000 barrels a day, but it has also hinted it may cut production if global supplies of crude continue to rise, according to Dow Jones Newswires.

Several reports in recent days, though, have suggested that global economic conditions may not be deteriorating as quickly as feared. The U.S. Federal Reserve said Friday that industrial production in the world's largest economy rose last month in line with expectations. On the other hand, the Energy Department, the International Energy Agency and now OPEC have all cut demand forecasts.

Light, sweet crude for March delivery rose 23 cents to $95.73 a barrel in Asian electronic trading on the New York Mercantile Exchange by midday in Singapore.

The Nymex crude contract rose 4 cents Friday to settle at $95.50 a barrel after alternating frequently between positive and negative territory. Oil prices have risen more than $8 in little more than a week.

On Sunday, Venezuelan President Hugo Chavez soothed American motorists, saying that Venezuela is not preparing to cut off oil shipments to the United States.

The socialist leader rattled oil markets when he threatened a week ago to halt shipments to the United States in retaliation for Exxon Mobil Corp.'s success in convincing courts in the U.S. and Europe to freeze Venezuelan assets.

"We don't have plans to stop sending oil to the United States," Chavez said Sunday during a visit to heavy-oil projects in Venezuela's petroleum-rich Orinoco River basin that were nationalized last year.

But he added that Venezuela could cut off supplies to the United States if Washington "attacks Venezuela or tries to harm us." Chavez has repeatedly warned against a possible U.S. invasion to seize control of Venezuela's immense oil reserves. U.S. officials have denied any such plan exists.
The United States relies on Venezuela for about 10 percent of its oil imports.

Chavez's administration is locked in a legal battle with Irving, Texas-based Exxon Mobil over compensation for the nationalization of one of four heavy-oil projects in the Orinoco River basin.
Exxon Mobil, the world's largest publicly traded oil company, is seeking to freeze billions of dollars in Venezuelan assets in the United States and Europe to guarantee a payoff if it wins a decision by an international arbitration panel.

Last month, a British court injunction ordered the temporary freezing of up to $12 billion in assets of state-run Petroleos de Venezuela SA, or PDVSA.

Brent crude for April delivery rose 26 cents to $94.89 a barrel on the ICE Futures exchange in London.

Heating oil futures rose 0.81 cent to $2.655 a gallon while gasoline prices gained 0.59 cent to $2.4997 a gallon. Natural gas futures rose 15.1 cents to $8.811 per 1,000 cubic feet.

Stocks Higher As Investors Await Fed

Wall Street was mostly higher Tuesday as the Federal Reserve opened a two-day meeting expected to bring another interest rate cut to revitalize the U.S. economy.

The Fed's rate decision is clearly the market's focus this week, and trading is marked by investors' conjectures about policymakers' thoughts on the weak economy and crunched financial industry. With an announcement not expected until Wednesday afternoon, the market in the meantime digested data on earnings, consumer spending and durable goods.

Investors did get some encouragement about the economy after the Commerce Department said orders for big-ticket items rose 5.2 percent in December, the widest jump in five months. In addition, the Conference Board reported consumer confidence fell in January -- pretty much as expected.

Economic data will continue to be scrutinized as investors try to determine what the Fed's take is on the economy. Investors are angling for a half-point cut following its emergency three-quarter-point cut last week.

"The market is just in a holding pattern," said Todd Leone, managing director of equity trading at Cowen & Co. "It seems we've hit a short-term bottom, and the market has been stabilizing as we wait to hear what the Fed says."

In early afternoon trading, the Dow Jones industrial average rose 37.64, or 0.30 percent, to 12,421.53.

Broader indexes were mixed. The Standard & Poor's 500 index rose 2.20, or 0.16 percent, to 1,356.16, and the Nasdaq composite fell 4.82, or 0.21 percent, to 2,345.09.

Government bond prices fell as stocks rose, indicating that investors feel less need for the safety of Treasurys. The 10-year Treasury note's yield, which moves opposite its price, was at 3.67 percent, up from 3.58 percent late Monday.

The dollar was mixed against most major currencies, and gold prices fell.

Oil prices moved higher as traders waited to see what the Fed's next move will be. A barrel of light sweet crude fell 23 cents to $90.76 a barrel on the New York Mercantile Exchange.
Wall Street has been extremely volatile in recent weeks amid fears of a U.S. recession and further write-downs in the financial sector. However, that has given way to a more quiet tone this week as investors looked for their second-straight day of gains before the Fed's decision.

Central bankers are widely expected to lower its key rate, now at 3.5 percent, by as much as one-half percentage point to 3 percent when policy-makers wrap up on Wednesday. This will be the last meeting for two months, but that doesn't rule out another emergency cut in the meantime.

Rate cuts are just one part of the central bank's plan to boost the economy. The Fed auctioned $30 billion in funds to commercial banks on Tuesday -- the fourth time since last month it has provided cash-strapped banks with extra reserves.

The auction is designed to keep banks lending and prevent a severe credit squeeze from pushing the country into a recession. Global banks have lost about $141 billion since the credit crisis began last year.

Investors were also hopeful after President Bush's State of the Union address Monday night. Bush urged Congress, as expected, to expedite its approval of a $150 billion tax relief and business incentive package.

As American Express Co.'s fourth-quarter results indicated Monday, companies are being forced to prepare for a climate throughout 2008 of deteriorating credit and slower spending. American Express said its fourth-quarter profit fell 10 percent after socking away more cash in reserve to use in case cardholders can't pay back their debt. AmEx rose 10 cents to $47.50.

In other earnings news, 3M Co., the maker of Post-it notes and Scotch tape, reported on Tuesday a decline in net income but the results beat analyst expectations. 3M rose 75 cents to $78.19.

The embattled mortgage lender Countrywide Financial Corp., which was recently bought by Bank of America Corp., posted a sharp loss, as expected, due to its missteps in subprime lending.

Countrywide rose 25 cents, or 4.2 percent, to $6.20; BofA added 46 cents to $41.66.

The Russell 2000 index of smaller companies dipped 1.13, or 0.16 percent, to 701.26.

Advancing issues led decliners by a 4-to-3 basis on the New York Stock Exchange, where volume came to 758.9 million.

In Asian trading, Tokyo's Nikkei stock average closed up 2.99 percent; Shanghai's key index added 0.87 percent; and Hong Kong's main index rose 0.99 percent. In European trading, London's FTSE rose 1.66 percent; Frankfurt's DAX rose 1.09 percent; and Paris' CAC rose 1.92 percent.