Stocks finished with small gains today as a nice rebound in financial stocks was offset by weakness in energy and technology shares.
In addition, some traders were betting that a compromise $789 billion stimulus package, announced this afternoon, will win congressional approval.
The finish was welcome news for most investors, who probably had been frightened by Tuesday's sell-off that saw the Dow Jones industrials fall 382 points in their worst loss since Dec. 1.
Today, the Dow closed up 51 points to 7,940, not a huge gain but a gain nonetheless. The Standard & Poor's 500 Index was up 7 points to 834. The Nasdaq Composite Index struggled for much of the day but closed up 6 points to 1,531.
Banks were largely higher after getting badly battered in Tuesday's near panic.
Citigroup (C, news, msgs), down 15% on Tuesday, was up 10.2% to $3.69. The percentage gain was the largest among the 30 Dow stocks. Bank of America (BAC, news, msgs), down 19% on Tuesday, was up 9.2% to $6.07. The Select Sector-SPDR-Financial (XLF, news, msgs) exchange-traded fund was up 4.8% to $9.32 after falling 10% on Tuesday. The ETF tracks the 80 stocks in the financial sector of the S&P 500.
Energy shares were weak because of falling oil prices. Crude oil fell below $36 a barrel for the first time since December, closing down 4.3% to $35.94. An Energy Department report showed larger-than-expected domestic crude supplies.
Exxon Mobil (XOM, news, msgs) fell 2.1% to $74.58 and was the Dow laggard on the day. Offshore driller Transocean (RIG, news, msgs) was off 1% to $58.68.
Big technology stocks, however, were mostly lower after BlackBerry maker Research In Motion (RIMM, news, msgs) warned that fiscal fourth-quarter earnings would be at the low end of estimates. The stock was down 14.5% to $48.76 and was the largest reason the Nasdaq-100 Index ($NDX.X) was off 2 points to 1,227.
| Wed. | Tues. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $35.94 | $37.55 | -$1.61 | -13.77% | -19.42% |
| Heating oil (per gallon) | $1.3164 | $1.3014 | $0.0150 | -8.20% | -6.35% |
| Natural gas (per million BTU) | $4.5320 | $4.5430 | -$0.0110 | 2.60% | -19.39% |
| Unleaded gasoline (per gallon) | $1.2698 | $1.2439 | $0.0259 | 0.07% | 25.95% |
Big bankers face Congress
The market's stabilization came as CEOs of the biggest banking companies testified before Congress on whether they've used funds from the government's Troubled Asset Relief Program (TARP) to make more loans and help stabilize the economy.And most conceded that the economy would probably be in much worse shape today if the TARP program had not been enacted in October.
The CEOs of Bank of America, Citigroup, JPMorgan Chase (JPM, news, msgs), Wells Fargo (WFC, news, msgs), Goldman Sachs (GS, news, msgs) and Morgan Stanley (MS, news, msgs) testified before the House Financial Services Committee today.
The bankers were asked to account for their use of the Troubled Asset Relief Program funds, explaining whether the banks have used them to make more loans.
"We are actively putting our capital to work," Goldman Sachs CEO Lloyd Blankfein said in prepared testimony.
Government reports have raised questions about the use of the TARP funds by financial services companies, which have drawn criticism for borrowing funds from the government and then giving out bonuses instead of making new loans to help revive the frozen credit markets and banking system.
Citigroup CEO Vikram Pandit said that he had "removed the people responsible for Citi's financial distress." Bank of America CEO Ken Lewis defended his company's use of the funds by arguing that compensation, including bonuses, is intended "to grow our business, enhance profitability and generate returns for investors," including those who "are the focus of this hearing: U.S. taxpayers."
In other financial-sector news: Swiss bank Credit Suisse (CS, news, msgs), which has not received any assistance from its government, was slammed in the fourth quarter.
The bank reported a worse-than-expected loss of 6.02 billion Swiss francs, or $5.2 billion, on write-downs and trading losses. Credit Suisse earned 540 million Swiss francs in the fourth quarter of 2007.
In December, Credit Suisse said it would cut 5,300 jobs, or 11% of its work force. About half of the cuts have taken place, the bank said.
Credit Suisse shares were up 3.7% to $26.93 in New York.
Research In Motion shares plunge on warning
Research In Motion (RIMM, news, msgs) tumbled this morning after the BlackBerry maker issued cautious guidance about its current quarter.The company said fiscal-fourth-quarter earnings will be at the lower range of a previous forecast of between 83 cents and 91 cents per share. The consensus estimate is for 86 cents per share.
"You (will) probably see big financial institutions cutting costs . . . and the consumer is just not getting a new handset," James Cordwell, an analyst with Atlantic Equities, told Thomson Reuters. "It just shows they're not immune to the economic slowdown."
Applied Materials posts big loss
Chip-equipment maker Applied Materials (AMAT, news, msgs) reported a big fiscal-first-quarter loss late Tuesday, and the company blamed "an unprecedented decline in demand."AMAT posted a loss of $132.9 million, or 10 cents per share, down from profit of $262.4 million, or 19 cents per share, in the same quarter a year ago. Excluding restructuring charges, the company would have had a break-even quarter, which is what analysts had expected.
Sales plunged 36% to $1.33 billion, missing Wall Street's estimate of $1.35 billion.
"Our leading semiconductor customers say that the fall-off in chip demand and pricing is the most severe they have ever experienced. Losses are mounting almost universally," CEO Mike Splinter said on a conference call with analysts.
The company did not provide a forecast for the current quarter but said it is "planning for a prolonged period of weakness."
Applied Materials also said that it will cut about 2,000 workers, or about 14% of its work force, a higher estimate than the 12% cut the company forecast in November.
Applied Materials shares were up 0.8% to $9.77.
Sirius Radio nears bankruptcy
Satellite radio company Sirius XM Radio (SIRI, news, msgs) is talking to billionaire investor Charles Ergen as it prepares to file for bankruptcy, The New York Times reported today.Sirius has been working with restructuring expert Joseph A. Bondi of Alvarez & Marsal and bankruptcy lawyer Mark Thompson of Simpson, Thacher & Bartlett to help prepare a Chapter 11 filing, according to the report
Ergen, who controls Dish Network and Echostar, has offered a capital injection for the company along with a plan to restructure its debt -- Ergen recently bought $300 million of Sirius' $3.25 billion debt.
Sirius needs to make a $175 million payment on its debt by Tuesday and is reportedly struggling to come up with the cash.
Sirius shares were down 52% to 6 cents this afternoon.
More from MSN Money
Congress works on stimulus package
Leaders of both houses of Congress were apparently nearing a compromise to move the economic stimulus package toward a final vote.A compromise is being sought between the Senate and the House versions of the bill.
The Senate passed the $838 billion package on Tuesday, but its version of the bill included some major cuts to spending provisions approved by the House of Representatives. The Senate bill dedicates more funds for medical research. It contains more than $100 billion for tax cuts to individuals and families. The House version, on the other hand, would spend $60 billion more on education and would use additional funds to upgrade the country's electricity grid.
President Obama insisted on Tuesday that he wanted a compromise version of the legislation on his desk before the weekend.
Reconciliation of the differences between the bills will be delicate, as the bill must pass both houses of Congress again. The three Republican senators who enabled passage in the Senate have threatened to walk away from the package if they are not satisfied with spending cuts in the final version, the Los Angeles Times reported today.
AIG to sell auto unit
American International Group (AIG, news, msgs) is in talks to sell its U.S. auto insurance division to Zurich Financial Services, according to published reports.AIG's 21st Century Insurance unit, which sells insurance over the Internet, could fetch up to $2 billion. AIG has been selling off its units in an effort to pay back an $85 billion government loan it received in September, when it faced the prospect of bankruptcy.
Zurich owns Farmers Insurance, which is the biggest auto insurer in California.
AIG shares rose 4.4% to 96 cents.
Nike next to cut jobs?
Nike (NKE, news, msgs) late Tuesday said that it could cut up to 1,400 jobs, or about 4% of its work force, an effort to realign its businesses.Nike employs about 35,000 people around the world.
The sneaker and apparel company said it would give the "exact number, timing and location" of the positions that will be eliminated after it conducts a review of its businesses, which will be complete at the end of May.
Shares of Nike dropped 1.6% to $44.31.
Andrew Rosenbaum contributed to this report.
| Wed. | Tues. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 0.300% | 0.305% | -0.005 | 36.36% | 160.87% |
| 5-year Treasury note yield | 1.765% | 1.791% | -0.026 | -5.77% | 13.80% |
| 10-year Treasury note yield | 2.762% | 2.847% | -0.085 | -2.88% | 23.08% |
| 30-year Treasury bond yield | 3.452% | 3.530% | -0.078 | -4.19% | 28.28% |
| Currencies | |||||
| U.S. Dollar Index | 86.125 | 86.135 | -0.010 | -0.39% | 4.84% |
| British pound in dollars | $1.4388 | $1.4548 | -0.0159 | -0.88% | -2.35% |
| Dollar in British pounds | £0.6950 | £0.6874 | 0.0076 | 0.89% | 2.40% |
| Euro in dollars | $1.2900 | $1.2910 | -0.0010 | 0.66% | -7.92% |
| Dollar in euros | € 0.7752 | € 0.7746 | 0.0006 | -0.65% | 8.60% |
| Dollar in yen | 90.43 | 90.31 | 0.12 | 0.62% | -0.24% |
| Canadian dollar in U.S. dollars | $0.806 | $0.805 | $0.0012 | -1.03% | -1.47% |
| U.S. dollar in Canadian dollars | $1.242 | $1.243 | -$0.0010 | 1.04% | 1.50% |
| Commodities | |||||
| Gold | $944.50 | $914.20 | $30.30 | 1.73% | 6.81% |
| Copper | $1.5400 | $1.5760 | -$0.04 | 4.87% | 9.22% |
| Silver | $13.5200 | $13.1300 | $0.39 | 7.60% | 16.25% |
| Corn | $3.6850 | $3.7675 | -$0.08 | -2.77% | -9.46% |
| Crude oil (NYMEX) (per barrel) | $35.94 | $37.55 | -$1.61 | -19.42% | -19.42% |
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