Thanks to a late-day slide in financial stocks, the Dow suffered a triple-digit selloff on Tuesday but managed to preserve the vast majority of Monday's gigantic gains.
Today's Markets
The Dow Jones Industrial Average fell 115.49 points, or 1.49%, to 7660.37, the S&P 500 fell 16.58 points, or 2.01%, to 806.34 and the Nasdaq Composite lost 37.37 points, or 2.40%, to 1518.40. The consumer-friendly FOX50 tumbled 10.95 points, or 1.78%, to 604.26.
"Yesterday was an exciting day up 500 points.I'll take 100 points down today.That's okay," Greg Ghodsi, senior vice president at Raymond James, told FOXBusiness. "The tendency is to try to run back in very quickly. We've been counseling clients to take a deep breath and relax. We're in a bear market so you need to stick with your plan."
There weren’t any major economic or earnings reports to move the markets on Tuesday so the focus was squarely on new testimony from regulators in Washington and how the markets responded to Monday's surge, which was the Dow's fifth largest point gain ever and 20th strongest rally in percentage terms in history.
While traders largely reacted positively to the fact that Wall Street held onto roughly 75% of Monday's rally, the Dow is still down 13% year-to-date and off 46% from its record close set in October 2007. Monday's big gains were sparked by the release of new details about the government's plan to rid bank of up to $1 trillion of the assets at the center of the credit crisis.
“I think it would be a moral victory in light of the big move we had yesterday,” NYSE trader Ted Weisberg of Seaport Securities told FOX Business.
General Motors (GM), JPMorgan Chase (JPM) and Bank of America (BAC) were the biggest percentage losers on the Dow on Tuesday. Just a three of the index's 30 components ended in the green, including Boeing (BA) and DuPont (DD).
The Nasdaq Composite tumbled twice as much as the Dow as tech stocks like Amazon.com (AMZN) and Yahoo! (YHOO) fell sharply.
“I’m not saying we are at the end of the bear market, although I do believe that the most forceful declines are behind us,” Dan Greenhaus, equity analyst at Miller Tabak, wrote in a note. He added that he believes that the rally off of 12-year lows on the Dow and S&P has “run its course for now.”
Slammed by a late-day slide, the financial sector tumbled 5% on Tuesday amid conflicting story lines. While Deutsche Bank (DB) and Credit Suisse (CS) joined a chorus of banks by saying they expect to be profitable in 2009, an analyst at Bank of America reportedly recommended selling the volatile sector due to a lack of confidence in the bailout plan.
Meanwhile, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner fielded questions from angry lawmakers Tuesday about the controversial bailout and compensation practices of American International Group (AIG).
Geithner also outlined the administration’s request for special powers to monitor and, if necessary, restructure too-big-too-fail non-bank firms like AIG. Tuesday evening many on Wall Street will tune in to watch President Barack Obama’s second prime-time news conference in which he is expected to sell the latest bailout and his $3.6 trillion budget.
In the commodity markets, crude managed to erase a day-long slide to end 18 cents higher at $53.98 per barrel. However, gold sank $29.10 per ounce to $924.70.
Corporate Movers
Goldman Sachs (GS) plans to shorten its timetable to give back TARP funds due to the uproar over AIG bonuses and its ties to the bailed-out insurer, The New York Times reported. While the newspaper reported Goldman plans to return the cash within the next month, a Goldman exec said Tuesday the bank hasn't decided when to return the funds.
Credit Suisse (CS) said it had a strong start to 2009 and it will ask shareholders next month to give it the option to raise $3.3 billion of capital for acquisitions.
Deutsche Bank (DB) said it expects to turn a profit in 2009 if the financial markets improve and sees no need to raise capital at this time.
Citigroup’s (C) reverse stock split may reduce calls for eliminating the bailed-out bank from the Dow Jones Industrial Average, Dow Jones Indexes told Reuters. Like FOXBusiness, Dow Jones, which selects the components of the index, is owned by News Corp. (NWS).
Williams Sonoma (WSM), the home décor company that owns Pottery Barn, beat the Street with a fourth-quarter adjusted-profit of 31 cents a share.
Carnival (CCL) exceeded expectations with a first-quarter profit of 33 cents per share and issued an in-line 2009 earnings forecast.
Walt Disney (DIS) saw its shares sink after the entertainment giant was downgraded to “neutral” from “buy” by Goldman Sachs, which cited valuation and mediocre performance from its studio entertainment division.
Hospira (HSP) plans to slash 1,400 jobs, or 10%, of its workforce in a move the medical products maker says will save up to $140 million per year.
Data Dump
The Richmond Fed's manufacturing index rebounded to a -20 reading in March, representing contraction but a big improvement from a -51 reading the month before.
Global Markets
European markets ended mixed as London's FTSE100 tumbled 1.05% to 3911.46 but Germany's DAX rose 0.26% to 4187.36.
In Asia, the Japanese benchmark Nikkei 225 jumped 3.32% to 8488.30 while Hong Kong's Hang Seng gained 3.44% to 13910.34. China's Shanghai Composite rose 0.56% to 2338.42.
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