Can Bernanke offer the market some relief?

The stock market was in need of reassurance this afternoon after continued bad news about housing and a decline in consumer confidence dampened the investor confidence that built up just last week.

So, tomorrow the focus will be on Federal Reserve Chairman Ben Bernanke, who is scheduled to testify before the Senate Banking Committee about the state of the housing market.

The Dow Jones industrials closed the day down nearly 72 points to 12,397. The Standard & Poor's 500 Index was down 8.9 points to 1,429, and the Nasdaq Composite was off 18.2 points to 2,437.

What Wall Street wants the Fed boss to say is something like this: "Relax. The housing market isn't that bad." Bernanke has, in fact, done a masterful job of reassuring Wall Street that the economy is doing just fine.

Whether investors will believe that story tomorrow is another question. There were enough bits of bad news on housing to give even the most optimistic real estate agent pause:

• Home building giant Lennar (LEN, news, msgs) said business was so soft it withdrew its 2007 earnings guidance entirely.

• A Standard & Poor's survey suggests home prices are falling in most major markets for the first time in 14 years.

• The National Association of Home Builders estimated new-home sales will decline 8% this year, worse than the 2% decline it had forecast in February.

The reason is the same offered by Lennar: Rising defaults and foreclosures among borrowers of so-called subprime mortgages is taking a toll on home sales. Lennar was down slightly today, but that was a relatively good performance for a housing stock.

The Philadelphia Housing Sector Index ($HGX.X) was down 1.52%. KB Home (KBH, news, msgs) fell 1.5% to $45.31. Pulte Homes (PHM, news, msgs) was down 1.7% to $26.79.

After the close, shares of Beazer Homes (BZH, news, msgs) fell more than 17% to $26.03 in after-hours trading after BusinessWeek magazine said federal authorities are investigating the nation's sixth-largest home builder for predatory lending and possible mortgage fraud. The shares were down nearly 3% before the news came out.

Oil spikes up on Iran worries

Down much of the day, crude oil finished up 2 cents at $62.93, its high for the year. Then, it jumped to $68 for a few minutes in electronic trading on rumors Iran had attacked a U.S. ship engaged in war games in the Persian Gulf. Within a few minutes, however, the U.S. Navy denied the report, and prices dropped back down to $63.88 a barrel -- still 95 cents more than the regular close.

The quick run-up -- and decline -- gives you an idea how closely traders are watching the situation in the Persian Gulf since Iran seized 15 British sailors last week. The tensions may affect markets tomorrow.

The strength of oil prices since last week has pushed energy stocks higher. The Amex Oil Index ($XOI.X) finished the day up 0.8% and is up 7% so far in March. ExxonMobil (XOM, news, msgs) was up 0.33% to $75.71.

A crummy market all around

Yesterday's report on new home sales knocked the Dow down 100 points, but the market pulled back to basically even on the day.

Lennar's report today -- coupled with a Conference Board report on consumer confidence -- also knocked the market lower, but, this time, there was no recovery.

Only five of the 30 Dow stocks were higher today. Fewer than 110 S&P 500 stocks were higher on the day. Decliners were ahead of gainers 2.5-to-1 on both the New York Stock Exchange and Nasdaq.

AT&T (T, news, msgs), up 0.33% to $39.44, and ExxonMobil led the Dow. The laggards were Microsoft (MSFT, news, msgs) (the publisher of MSN Money) and DuPont (DD, news, msgs), down 1.8% and 3%, respectively. The latter is sensitive to energy prices.

Interest rates were slightly higher on the day. The 10-year Treasury note yield rose to 4.61% today from 4.59% yesterday.

Energy prices -- New York close

	Tues.	Mon.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$62.93	$62.91	$0.02	1.84%	3.08%
Heating oil (per gallon)	$1.7864	$1.7761	$0.0103	0.34%	11.80%
Natural gas (per million BTU)	$7.5030	$7.2540	$0.2490	2.78%	19.11%
Unleaded gasoline (per gallon)	$2.0730	$2.0677	$0.0053	12.20%	29.39%

What's bothering consumers?

The answer is partly worries about how problems with subprime mortgages will affect local real estate markets, the Conference Board said today.

The result was to drive the business research organization's consumer-confidence index to 107.2 from a revised 111.2 in February. Economists had expected a decline to 108.5. The index measures consumer expectations. A measure of 100 means the expectation were equal to those of 1985. A recent spike in gasoline prices also contributed to the decline.

"Apprehension about the short-term future has suddenly cast a cloud over consumers' confidence," Lynn Franco, the director of the Conference Board's consumer-research unit, said in a prepared statement. "Despite diminishing expectations, consumers' assessment of present-day conditions remains steady and does not suggest a weakening in economic conditions."

• Get free, real-time stock quotes on MSN Money

But not everyone saw the glass as half-empty. "The consumer is holding up surprisingly well given the flood of bad news in recent weeks," Chris Rupkey, a senior financial economist at Bank of Tokyo-Mitsubishi UFJ, told Bloomberg News. "The availability of work and higher wages seems to be key to the consumer's relatively upbeat mood."

The average consumer-confidence number for 2006 was 105.9.

Lennar's profit plummets

Home builder Lennar reported a 73% plunge in first-quarter earnings of $68.6 million, or 43 cents per share, down from $258.1 million, or $1.58 per share, last year. Earnings were in line with analysts' expectations. That was the good news.

The bad news was that the big builder, a component of the S&P 500, said it won't meet its 2007 earnings goals. "While some markets are performing better than others," CEO Stuart Miller said in a statement, "the typically stronger spring selling season has not yet materialized."

The company said: "We are not comfortable providing a new earnings goal at this time."

• Video: Housing roadblock

Home prices fall

Home prices across the U.S. fell in January, another sign that the housing market is continuing to struggle.

The Standard & Poor's/Case-Shiller home-price index of 20 U.S. cities declined 0.2% in January from last year, and the 10-city index fell 0.7% from January 2006.

"The annual declines in the composites are a good indicator of the dire state of the U.S. residential real estate market," Robert J. Shiller, the chief economist at MacroMarkets, said in a statement. The indexes measure the residential housing market and track changes in the value of residential real estate market across the country.

"The home-price market is still in decline," Maureen Maitland of Standard & Poor's told CNBC. "There is really nothing turning around at this point."

Eleven of the 20 cities in the index showed year-over-year price declines, with prices in Detroit and Boston falling the most.

• Video: More on where home prices are headed

Subprime still a worry

Meanwhile today, a number of banking regulators are set to testify before the House Financial Services subcommittee about the meltdown in the subprime mortgage sector and its likely effects on the economy.

Sen. Christopher Dodd, D-Conn., told CNNMoney.com yesterday that federal regulators have been "asleep at the switch" and must start exercising their authority to stop the hemorrhaging of the subprime mortgage market.

Subprime mortgages were a $600 billion business last year, CNNMoney.com said, citing industry publisher Inside Mortgage Finance. Subprime lenders gave loans to high-risk buyers who have struggled to repay the loans when housing prices fell and interest rates rose.

As the fears about subprime lending have taken their toll on the stock markets, bonds backed by automobile loans might be the next target, Standard & Poor's said.

The worry is that homeowners with subprime mortgages may have trouble making payments on their car loans, as interest rates on their adjustable-rate mortgages move higher, S&P said in a report. Those borrowers may have "less cash flow available for other expenses, including auto loan payments," S&P analyst Mark Risi said.

Auto lenders like Capital One Financial (COF, news, msgs) could have contributed to the problem, Risi said, as they eased their standards for the loans they underwrite.

But the fallout will likely be limited for auto loans, Risi continued, because most subprime auto borrowers rent and do not own their homes.

New Century another step closer to bankruptcy?

Battered subprime lender New Century Financial (NEWC, news, msgs) could be even closer to filing for bankruptcy protection, according to a public notice that Morgan Stanley (MS, news, msgs) posted in The Wall Street Journal on Friday.

The notice stated that Morgan Stanley Mortgage Capital will auction $2.48 billion of New Century's mortgages. First bids for the 13,200 residential loans are due by 11 a.m. ET Thursday, the notice stated.

Morgan Stanley "felt so uncomfortable with" New Century's ability to repay the loan that "they decided to just take the loans and auction them off themselves," analyst Christopher Brendler of Stifel Nicolaus told The Journal in an article about the Morgan Stanley notice.

The New York Stock Exchange suspended trading of New Century on March 13; New Century shares now trade on the pink sheets and were down 9.6% at $1.41 this afternoon. Morgan Stanley, meanwhile, was down 1.1%, at $79.47.

Chrysler to get bids tomorrow?

There now seem to be a number of players interested in snapping up DaimlerChrysler's (DCX, news, msgs) struggling Chrysler unit.

DaimlerChrysler is said to have two bids in hand already, and The Detroit News reported that offers could arrive by tomorrow from two other players: private-equity firm Cerberus Capital Partners and a private-equity team of Centerbridge Partners and Blackstone Group.

Daimler was up 1.8% to $82.67.

Last week, Canadian auto parts maker Magna International (MGA, news, msgs) was said to have paired up with an unidentified private-equity player to make a bid for Chrysler of between $4.6 billion and $4.7 billion. General Motors (GM, news, msgs) reportedly made a no-cash offer in January that would have given DaimlerChrysler 10% of GM stock.

Investment banks are licking their chops as well, the newspaper reported. The big banks are crucial to the private-equity players, because the extent of their interest will help determine how big a bid will be made.

Blackstone has lined up banks such as Lazard, Lehman Bros. (LEH, news, msgs) and Bank of America (BAC, news, msgs), according to the newspaper, to help support a bid. Cerberus Capital has Goldman Sachs Group (GS, news, msgs) behind it for financing support.

"The banks are becoming much more important in private-equity deals than they used to be," David Brophy, the director of the Office for the Study of Private Equity Finance at the University of Michigan's Ross School of Business, told The News. "They're more capable and willing to put their own equity into the deal."

Also today, DaimlerChrysler said it is pushing back its first-quarter results to May 15 from April 26 because of a required accounting switch it has to make.

Short hits from the markets -- 4 p.m.

	Tues.	Mon.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	4.920%	4.930%	-0.010	-2.38%	0.72%
5-year Treasury note yield	4.497%	4.478%	0.019	-0.13%	-4.34%
10-year Treasury note yield	4.612%	4.587%	0.025	1.36%	-2.08%
30-year Treasury bond yield	4.809%	4.783%	0.026	3.00%	-0.19%
Currencies
U.S. Dollar Index	82.72	82.80	-0.08	-0.93%	-0.85%
British pound in dollars	$1.967	$1.970	-0.003	0.16%	0.37%
Dollar in British pounds	£0.508	£0.508	0.001	-0.16%	-0.37%
Euro in dollars	1.335	1.334	0.002	0.91%	1.18%
Dollar in euros	€ 0.7488	€ 0.7498	-0.001	-0.90%	-1.16%
Dollar in yen	¥117.83	¥118.11	-0.28	-0.61%	-1.00%
Commodities
Gold	$668.80	$662.10	$6.70	-0.55%	4.83%
Copper	$3.0575	$3.0575	-$0.08	11.10%	6.50%
Silver	$13.2800	$13.4100	-$0.13	-6.71%	2.67%
Crude oil (NYMEX) (per barrel)	$62.93	$62.91	$0.02	1.84%	3.08%

Target is on target

Discount retailer Target (TGT, news, msgs) said after the close yesterday that March same-store sales are likely to be in line with its forecast of an 11% to 13% increase for the five-week period ending April 7. Same-store sales are sales at stores open at least one full year.

Target said its estimate was based on the first three weeks of March and said it was benefiting from an earlier Easter this year. Last month, same-store sales rose 5.7%.

Wall Street wasn't impressed, however. The stock was down 1.7% to $60.54.

Delta eyes new stock listing

Delta Air Lines (DALRQ, news, msgs) is preparing to emerge from bankruptcy protection by May 1, with a listing on a stock exchange soon thereafter.

CEO Gerald Grinstein told investors in a webcast today that the airline's future is "more as an acquirer rather than being acquired." Grinstein said that consolidation within the airline industry is unlikely to happen in the next three to four years and that six network carriers is not too many.

Delta blocked a hostile bid from rival airline US Airways (LCC, news, msgs) in November.

Delta also forecast revenue growth of 4% in 2007, as well as profit of $816 million for the year, excluding reorganization items.

By Elizabeth Strott and Charley Blaine