Spending Fears Spank Stocks

Financial subsector indices were mixed. The KBW Bank Index and the Amex Securities Broker/Dealer Index both advanced 0.3%. The NYSE Financial Sector Index was off 0.9%.

As for Countrywide, which surged 51% in the last session on a report it was about to be bought, it was down 18.3% to finish at $6.33 this time. Bank of America agreed to buy the lender for $4 billion, or $7.16 a share. That's more than 7.5% below its closing price but 40% above where the stock was before the prospect of a takeover was reported. BofA was fractionally weaker.

Elsewhere, Citigroup (C Quote) was on the winning side, rising 1.6% to $28.56 amid speculation it might be close to getting a multibillion cash infusion from an investor or investment group, possibly Saudi billionaire Prince Alwaleed.

Among analyst ratings changes, JPMorgan Chase upped Dow member Honeywell (HON Quote) to neutral from underweight and Dell (DELL Quote) to overweight from neutral. Also on the positive side, Stifel Nicolaus raised its rating for Caterpillar (CAT Quote) to buy from hold.

On the downside, Deutsche Securities cut several stocks to sell, including Gold Fields (GFI Quote), Harmony Gold (HMY Quote) and Anglogold (AU Quote).

Traders were also digesting a spate of economic data. Before the open, the Labor Department said its import price index was unchanged in December, compared with a revised 3.3% rise in November. The data matched economists' expectations.