Stocks rebound from big losses

By Charley Blaine and Elizabeth Strott

The stock market dodged a big bullet today.

The Dow Jones industrials and the Standard & Poor's 500 Index appeared headed below their January lows, and the Nasdaq Composite Index was looking at closing at its lowest level since September 2006.

But news of a possible bailout for bond insurance company Ambac Financial Group (ABK, news, msgs) and bullish comments from Cisco Systems (CSCO, news, msgs) CEO John Chambers turned the market around.

The Dow, down 226 points just after 2 p.m. ET, finished the day down 45 points at 12,214. The S&P 500 closed down 5 points to 1,327; it had been down nearly 24 points two hours earlier. The Nasdaq bulled its way to a gain of 2 points to 2,260; it had been down nearly 38 points in the early afternoon.

The Nasdaq-100 Index ($NDX.X) finished up 10 points, thanks to gains in such big stocks as Applied Materials (AMAT, news, msgs), up 7.6% to $20.32; Apple (AAPL, news, msgs), up 2.4% to $124.63; and Amazon.com (AMZN, news, msgs), up 4.7% to $65.34.

Whether today's finish represented a real turnaround won't be clear for several days or weeks. The important news came from the S&P 500, which fell just under 1,310.50, its Jan. 22 closing low, and then bounced up 17 points.

Technicians will now watch 1,310 as a significant support level going forward. If the index drops below that level, the next support level will be 1,269.87, its intraday low on Jan. 23. That would translate into roughly 11,600 for the Dow, 600 points under today's close.

Ambac finished the day up nearly 8% to $10.72, second-best among S&P 500 stocks, after news surfaced that bankers and New York state insurance authorities were working on a deal that would bring new capital to the company and maintain its AAA rating. The goal, apparently, was to get the deal done tonight, CNBC's Charles Gasparino reported. But he noted that prior reports of an imminent deal have proved incorrect.

• Video: CNBC reports on Ambac and Citigroup

Cisco's Chambers told a New York investment conference the networking giant might see some bumps from the U.S. economy, but he predicted the problems would be short-lived. Cisco shares closed down 0.5% at $24.29 on a day when the shares had been down as much as 2.7%.

The modest losses for the Dow and the S&P 500 were a huge improvement from earlier in the day, when bad news about banking giant Citigroup (C, news, msgs) and chip maker Intel (INTC, news, msgs) had unleashed waves of selling.

Citigroup was down as much as 6% on suggestions it might have to raise new capital and an earnings estimate cut by a Merrill Lynch analyst. The bank insisted, however, that it did not need to raise more cash. The stock ended down 4.3% to $22.10.

Intel fell after announcing late Monday that its gross profit margin -- a key profitability measure -- would shrink from 57% to 54% in the first quarter. The company blamed falling prices in NAND flash memory prices for the lower margin. The stock closed down just 1 cent to $20. It had been down as much as 2.8% to $19.44.

Meanwhile, Federal Reserve Chairman Ben Bernanke warned that more needs to be done to help troubled homeowners. He told bankers at a Florida meeting that foreclosure problems would ease if lenders forgave a portion of borrowers' loan principals.

The uncertainty that racked the U.S. stock market drove many investors to the relative safety of Treasury securities and platinum. Profit-taking drove crude oil, gold, silver, copper and agricultural commodity prices lower and cut down commodity-related stocks.

Crude oil closed at $99.52 a barrel, down $2.93 from Monday and its first close under $100 in five trading sessions. ExxonMobil (XOM, news, msgs) was off 1.2% to $86.69.

Gold closed down $17.90 to $966.30 an ounce in New York after reaching $988.50 during the day.

Newmont Mining (NEM, news, msgs) fell 4.2% to $50.20. Freeport-McMoRan Copper & Gold (FCX, news, msgs) slumped 4.4% to $98.93. Dow component Alcoa (AA, news, msgs) was off 0.8% to $38.

Eight Dow stocks finished with gains, led by software giant Microsoft (MSFT, news, msgs), up 2.2% to $27.59. (Microsoft is the publisher of MSN Money.)

Only 223 S&P 500 stocks finished higher, but 51 Nasdaq-100 stocks finished ahead on the day.

Apple moves up; Google doesn't

Apple shares moved up after company executives insisted that the tech giant would sell 10 million iPhones in the current fiscal year.

The stock has been stumbling of late as analysts have become increasingly skeptical that the goal can be reached, arguing that the slowdown in consumer spending will mean reduced spending on mobile phones and other electronics.

But CEO Steve Jobs said at today's annual meeting that the goal would be met in part because the iPhone would be available in Asia later this year.

• Video: CNBC reports on Apple's annual meeting

At the same time, Apple, which has some $18 billion in cash and investments on its books, said it won't be buying back shares or begin paying a dividend. The stock was down 37% as of the end of trading today.

Shares of Google (GOOG, news, msgs), meanwhile, fell 2.7% to $444.60 after Facebook hired Sheryl Sandberg as its chief operating officer. She has managed the unit that handles sales for about 99% of Google's advertisers.

"Sandberg's departure is a significant loss for Google," RBC Capital analyst Jordan Rohan told Reuters. "It signals that the company has reached a level of scale and bureaucracy with which some early Google employees are uncomfortable."

With today's close, Google shares are down 35.7% this year and are off 39% from their all-time closing high of 732.94.

• Top Stocks blog: Google tanks, but don't worry

Why Citigroup was slammed

Merrill Lynch analyst Guy Moszkowski slashed his first-quarter estimate for Citigroup this morning, saying he expects Citigroup to lose $1.66 per share in the first quarter, with the bank earning 24 cents a share for all of 2008.

His previous forecast pegged the bank to earn 55 cents a share in the first quarter and $2.74 per share in 2008.

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

Moszkowski said he expects Citigroup to write down $15 billion on bad subprime bets in the first quarter.

Earlier, the head of Dubai International Capital, a Dubai investment fund, said he believes the troubled company is going to need more cash to bolster its capital.

Citigroup has negotiated a $7.5 billion investment from Abu Dhabi late last year and a $14.5 billion investment from a group of foreign investors that includes Kuwait and Singapore. "It's going to take more than that to rescue Citigroup," Sameer Al Ansari told a private-equity conference in Dubai.

Citigroup has been slammed by the subprime meltdown: Chuck Prince resigned as chief executive officer; the bank lost $9.83 billion in the fourth quarter; it slashed its quarterly dividend by 41%; and it has cut hundreds of jobs. More job cuts are expected.

The Abu Dhabi Authority's stake represents 4.9% of the equity in Citigroup. Abu Dhabi and Dubai are part of the United Arab Emirates, a federation in one of the richest oil-producing regions in the world.

Banks and securities firms have raised about $105 billion from sovereign wealth funds, governments and public investors, according to Bloomberg.

Energy prices -- New York close

	Tues.	Mon.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$99.52	$102.45	-$2.93	-2.28%	3.69%
Heating oil (per gallon)	$2.7918	$2.8408	-$0.0490	-1.69%	5.37%
Natural gas (per million BTU)	$9.3530	$9.3460	$0.0070	-0.30%	24.99%
Unleaded gasoline (per gallon)	$2.5291	$2.6720	-$0.1429	0.67%	1.54%

Commodities 'disaster' near?

Are commodities in a bubble?

Yes, one New York money manager told CNBC today. "The commodities are a disaster waiting to happen," Richard Steinberg of Steinberg Asset Management told CNBC this morning.

Light, sweet crude oil was bouncing around today after reaching an intraday high of $103.95 a barrel on Monday -- topping a previous inflation-adjusted record set in 1980. By late morning today, however, crude was down $2.25 to $100.20.

• Video: How a weak dollar helps

"Energy markets are waiting for the OPEC meeting tomorrow for further direction, as well as the EIA numbers out the same day," said Edward Meir, an analyst at MF Global, in a note to clients. Analysts expect oil inventories to rise for an eighth week in a row in Wednesday's report from the Energy Information Administration.

The Organization of Petroleum Exporting Countries, which meets Wednesday, isn't expected to increase oil production.

Many investors have turned to commodities as a means to avoid the stock-market turmoil and as a hedge against inflation. Testimony by Bernanke last week indicated that the Fed is more concerned about the slowing economy than rising inflation and will likely lower interest rates at its next meeting on March 18.

"That's a clear sign to everybody they are going to cut interest rates again and inject more liquidity into the financial system," energy economist Philip Verleger told The Wall Street Journal. "And it's a clear sign to the financial community that inflation rates are likely to rise. And the natural response of investors to such a signal is to increase their purchases of hard assets."

So are we in a recession already?

The second billionaire in two days is saying that the U.S. is in a recession.

Sir Richard Branson, chairman of Virgin America, told CNBC today that it seems like the U.S. is in a recession. Warren Buffett had told the financial news channel the same thing on Monday.

Investors are turning to a speech from Bernanke today for more clues about the Fed's attitude. Bernanke spoke about the subprime-mortgage mess at a banking convention in Orlando, Fla. The Fed chief said he expects foreclosures and delinquencies to increase, and that housing problems require "a vigorous response." Bernanke also said that more should be done to help troubled homeowners.

• Video: Bernanke discusses the mortgage market

Futures prices indicate most traders expect the Fed will cut rates by another three-quarters of a percentage point, to 2.25%, later this month.

Partly due to that expectation, the dollar continues to fall against both the yen and the euro. The dollar has fallen more than 7% against the yen year to date.

Federal Reserve Vice Chairman Donald Kohn told the Senate Committee on Banking, Housing and Urban Affairs this morning that banks "continue to face challenging market conditions and persistent pressure on earnings." He expects banks and other financial companies to write down more assets. "Problems in the mortgage and housing markets have been highly unusual," he noted, "and clearly some banking organizations have failed to manage their exposures well." While losses will occur, he said he didn't think the losses would threaten the banks' viability.

Chips under pressure

Intel's lowered profit forecast wasn't completely unexpected.

On Monday, the Semiconductor Industry Association said that worldwide sales of semiconductors were flat in January from the year before and down 3.6% from December. The trade group said slow growth in the United States may hurt consumer purchases of electronic products.

• Video: Most common tax mistakes

The Intel sell-off and then its recovery affected other chip stocks. Shares of Advanced Micro Devices (AMD, news, msgs) had fallen as much as 5.6% to $6.38 but closed the day unchanged at $6.76. Texas Instruments (TXN, news, msgs) had fallen 4.7% to $29.27 but climbed back to $29.27, down just 2.2%. The Philadelphia Semiconductor Index ($SOX.X) closed up 0.8% to 348.29. It had been down as much as 2.2% in the late morning.

Barr Pharmaceuticals wins ruling; shares soar

Shares of Barr Pharmaceuticals (BRL, news, msgs) jumped 8.3% to $49.47 today, the best S&P 500 performance, after a federal court ruled in favor of the drug company late Monday.

The court ruled against German drug giant Bayer in a dispute over the oral contraceptive, Yasmin. The ruling voided Bayer's patent exclusivity over Yasmin, allowing Barr to make a generic version of the drug.

Barr had filed with the Food and Drug Administration to make a generic version in 2005, but Schering -- Yasmin's original manufacturer, which Bayer bought in 2006 -- sued to block the move.

Bayer retains exclusive distribution rights in the U.S. through 2009.

Yasmin had been one of Bayer's best-selling drugs, with U.S. sales of $488.1 million in 2007.

Barnes & Noble's outlook disappoints

What initially sounded like good news from a big bookseller didn't hold up under scrutiny.

Barnes & Noble (BKS, news, msgs) late Monday boosted its fiscal-fourth-quarter earnings guidance to between $1.76 and $1.82 per share, up from a previous forecast of between $1.57 to $1.76 a share. But the increase included a 10-cent gain from litigation settlements.

Excluding that, Barnes & Noble expects to earn about $1.67 per share, below Wall Street's estimate of $1.71 per share.

Shares fell 4.9% to $26.95.

More people file for bankruptcy

More than 76,000 Americans filed for bankruptcy in February, a 15.2% jump from the number of filings in January and up 37.3% from February 2007.

A report from the American Bankruptcy Institute showed that the February figure was the highest since October 2005, when an eye-popping 620,000 consumers filed for bankruptcy -- before a new law made it more difficult for people to file for bankruptcy protection.

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

	Tues.	Mon.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	1.595%	1.640%	-0.045	-11.39%	-49.20%
5-year Treasury note yield	2.492%	2.479%	0.013	-0.68%	-27.87%
10-year Treasury note yield	3.579%	3.534%	0.045	1.27%	-11.30%
30-year Treasury bond yield	4.484%	4.425%	0.059	1.45%	0.56%
Currencies
U.S. Dollar Index	73.695	73.735	-0.040	-0.08%	-3.91%
British pound in dollars	$1.9873	$1.9841	0.0032	-0.14%	-0.10%
Dollar in British pounds	£0.5032	£0.5040	-0.0008	0.14%	0.10%
Euro in dollars	1.5223	1.5207	0.0016	0.29%	4.16%
Dollar in euros	€ 0.6569	€ 0.6576	-0.0007	-0.29%	-3.99%
Dollar in yen	103.31	103.41	-0.10	-0.82%	-7.64%
Canadian dollar in U.S. dollars	$1.007	$1.011	-$0.0045	-0.76%	1.41%
U.S. dollar in Canadian dollars	$0.993	$0.990	$0.0035	0.59%	-1.45%
Commodities
Gold	$966.30	$984.20	-$17.90	-0.89%	15.31%
Copper	$3.8215	$3.9285	-$0.11	-1.46%	25.67%
Silver	$19.8400	$20.1800	-$0.34	-0.38%	32.98%
Crude oil (NYMEX) (per barrel)	$99.69	$102.45	-$2.76	-2.11%	3.87%