Stocks Open Up, Despite Housing Data

The fourth-quarter drop in home prices was a record, but stocks shrugged off the news.
Author:
Publish date:

The major indices took a sector-indiscriminate blow Monday, adding to February's mounting losses, with the Dow receding to levels not seen since 1997. But on Tuesday stocks in New York opened humbly higher, as investors look to Washington for more discussion on monetary policy.

The

Dow Jones Industrial Average

was recently rising 10 points to 7125. The

S&P 500

was higher by 1 point to 745. The

Nasdaq

was higher by 11 points at 1398 out of the gate.

Investors will get a preliminary reading on consumer sentiment for February, as The Conference Board is expected to show Americans are growing more pessimistic, with analysts predicting the indicator will register a 35, vs. 37.76 in January.

Earlier Tuesday morning, Wall Street learned that the fall in prices of single-family homes accelerated, according to Standard & Poor's/Case-Shiller home price index. Prices fell 18.5% in December from a year earlier, a record drop for the 21-year old index.

The S&P/Case Shiller composite index of 20 metropolitan areas was lower by 2.5% in December from November, compared with a 2.3% step down the previous period.

Wall Street's ears will turn to Washington today, as Fed chairman Ben Bernanke gives a testimony on monetary policy. Investors were unsettled by reports on Monday that the government could convert its preferred shares of struggling banks into common shares and

substantially increase its ownership stake in said banks, adding to the debate on bank nationalization.

The Street must have liked what it heard because

Citi

(C) - Get Report

and

BofA

(BAC) - Get Report

, whose shares have been punished on a daily basis,

were the only gainers on the Dow Tuesday, rising 9.7% and 3.2%, respectively.

Speaking of government bailouts,

AIG

(AIG) - Get Report

, set to air its year-end results next week, said Monday

that it's discussing "alternative options" with regulators to stay afloat in the wake of the financial crisis. The government already holds nearly an 80% stake in the firm, after extending it $150 billion in taxpayer loans.

Looking away from Washington for a minute, Wall Street also received a variety of retail earnings early Tuesday.

Macy's

(M) - Get Report

reported fourth-quarter sales in line with expectations,

but said profit toppled 59% as it suffered weak sales and one-time costs.

Target's

(TGT) - Get Report

fourth-quarter profit also declined, some 41%, amid anemic consumer spending.

In other earnings,

Office Depot

(ODP) - Get Report

said it lost $1.54 billion, on charges and a 15% drop in sales in the fourth quarter.

In a bit of relief,

Home Depot

(HD) - Get Report

delivered

a less-severe-than-expected quarterly loss. But the top home-improvement retailer, which is cutting 7,000 jobs as it shutters its Expo Design Center chain and trims corporate costs, also said per-share operating profit would fall in 2009.

In commodities, oil was rising 10 cents, at $38.54, while gold was retracting 80 cents at $994.20 an ounce.

Longer-dated Treasuries were recently rising; the 10-year note was recently higher by 5/32 to yield 2.7%, the 30-year was rising 22/32, yielding 3.5%.

The dollar was stronger against the yen, and weaker against the pound and euro.

Stocks abroad were widely lower. The FTSE in London and the DAX in Frankfurt losing 1.5% and 2.1% after Japan's Nikkei and Hong Kong's Hang Seng both ended with losses.