Updated from 4:20 p.m. EDTStocks 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.
"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.
Credit Suisse ( CS) 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)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) and JP Morgan Chase, which both said earlier in the quarter that they are thus far profitable in 2009. Meanwhile, Goldman Sachs ( GS) 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) 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) with a buy rating, Argus upgraded Texas Instruments ( TXN) to a buy, and Thomas Weisel lifted Microchip Technology ( MCHP) 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.