Stocks Fail to Extend Gains

The market ends moderately lower Tuesday after the big rally that started the week. Frank Curzio discusses the day in The Real Story.
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Updated from 4:20 p.m. EDT

Stocks in New York ended moderately lower Tuesday as the major equity averages took a step back after the big rally that started the week.

The

Dow Jones Industrial Average

gave up 115.49 points, or 1.5%, to 7660.37, and the

S&P 500

shed 16.56 points, or 2%, to 806.36. The

Nasdaq

fell 38.94 points, or 2.4%, to 1518.63. The Dow and the S&P momentarily ticked into positive territory before dropping again in the afternoon.

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JP Morgan Chase

(JPM) - Get Report

and

Bank of America

(BAC) - Get Report

were the worst performers on the Dow, falling 8.6% and 6.7%, respectively. Financials, which led the major indices 7% higher in the previous session as the market applauded the U.S. government's public and private investment plan, were generally weaker.

"Now the questions are what can we make of this and where do we go from here? We need more information to see how these things pan out," says David Ader, bond strategist with RBS Greenwich Capital. "It's not like this is a rejection. We trade information, new information, and on a day like today there simply isn't anything out there."

Had the session been higher, it would have been an anomaly, writes Vince Farrell, chief investment officer of Soleil Securities and a contributor to

RealMoney.com

. Farrell credits Laszlo Birinyi for pointing out that there have been five other days since 1990 when the market closed up 6%. Only one of those times has it risen the next day.

"It would be fine with me if this were to be the second time we had an up day after such a strong advance, but don't count on it, and don't be disappointed by a down day," wrote Farrell.

One critic of the Treasury's plan to secure the future of the banks emerged on Tuesday. Nobel Prize-winning economist Joseph Stiglitz said he feels Washington is effectively using the taxpayer to guarantee against downside risk on the value of bad assets held by banks, while luring private investors with the upside, according to a

Reuters

report. Stiglitz said the plan was "badly flawed" and "amounts to robbery of the American people".

Governments globally have spent hundreds of billions of dollars trying to clean up and restore working order to financial institutions, and glimmers of hope are emerging.

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Credit Suisse

(CS) - Get Report

became one of the

latest banks

to say that it had a strong start to the year. The bank said it is positioned to better weather negative market trends and "to prosper when markets recover."

Germany's

Deutsche Bank

(DB) - Get Report

also said that it is capable of withstanding the tough conditions and has "made a good start to 2009."

Neither of those stocks had gains for the day, however. Credit Suisse shares gave up 9.7% to $30.70, and Deutsche Bank ticked down 3.8% to $42.10.

The announcements follow similar outlooks from

Citigroup

(C) - Get Report

and JP Morgan Chase, which both said earlier in the quarter that they are thus far profitable in 2009.

Meanwhile,

Goldman Sachs

(GS) - Get Report

is

mulling a sale

of its minority stake in Industrial & Commercial Bank of China to help pay off $10 billion in federal bailout funds, according to a report in

The Wall Street Journal

. Goldman shares were off by 1.1% at $110.65.

The

AIG

(AIG) - Get Report

bonus saga continued Tuesday as the

Federal Reserve

Chairman Ben Bernanke and Treasury Secretary Tim Geithner both testified at a congressional hearing on the matter.

New York Attorney General Andrew Cuomo's office said Monday that 15 of the top 20 bonus recipients at AIG have agreed to

return their bonuses

, which amounted to about $50 million of the $165 million awarded earlier this month.

AIG shares were down 4.7% at $1.41.

Elsewhere, a few technology names quietly gained

analysts'

good graces. Deutsche Bank initiated coverage on

Marvell Technology

(MRVL) - Get Report

with a buy rating, Argus upgraded

Texas Instruments

(TXN) - Get Report

to a buy, and Thomas Weisel lifted

Microchip Technology

(MCHP) - Get Report

to overweight from market weight.

Marvell Technology fell 1% to $9.18, Texas Instruments gave up 2.3% to $12.45, and Microchip Technology edged down 1.1% to $21.02.

Longer-dated Treasuries were mixed. The 10-year note was down 14/32 yield 2.7%, while the 30-year was higher by 28/32, yielding 3.6%.

Checking in on commodities, oil rose 18 cents to settle at $53.98 a barrel, and gold fell $28.70 to $923.80 an ounce. The dollar was recently slightly weaker against the yen, and stronger vs. the euro and pound.

Stocks in Europe were varied, with the FTSE 100 down 1.1% and the Dax up 0.3%. In Asia, Hong Kong's Hang Seng and Tokyo's Nikkei gained more than 3% apiece.