Stock rebound on Citi talk
Wall Street bounces on report that financial giant may put itself on the block.
NEW YORK (CNNMoney.com) -- Stocks gained Friday morning after a report that Citigroup could put itself on the block gave investors a reason to scoop up shares hit in this week's battering.
The Dow Jones industrial average (INDU), the Standard & Poor's 500 (SPX) index and the Nasdaq composite (COMP) all gained close to 2% in the early going.
This follows a severe market plunge Thursday, which has brought the major indexes down to about half their peak levels from 2007.
Peter Cardillo, analyst for Avalon Partners, said the markets are "wrestling with the fear of deflation setting in" following the record decline in consumer prices, reported earlier this week. But hopes that Citigroup would sell itself could "take the market up a little," he said.
"Hopefully, we can get some daylight here and stop the hemorrhaging," he said.
Citigroup: The Wall Street Journal reported that Citigroup's board of directors is scheduled to meet Friday to discuss ways to reverse the stock's slide.
Those measures include the possibility of selling pieces of the company or even an outright sale, the report said, citing people familiar with the situation.
Shares of Citigroup (C, Fortune 500) plunged 26% Thursday to a 15-year low. The fall came even after Saudi Prince and long-time Citigroup investor Alwaleed Bin Talal said he increased his stake to 5% following the U.S. government's $25 billion bailout for the troubled bank. Before the bailout, the prince held a 4% stake.
Citigroup, one of the hardest-hit financial firms during the credit crisis, has lost more than $20 billion in the past four quarters. The financial giant is facing tough economic conditions ahead, which could translate to further losses tied to consumer and business loans. Shares gained 6% Friday morning.
As yet another sign of the financial crisis, Washington Mutual said Thursday that it was eliminating 1,600 jobs in the San Francisco area, following its failure on Sept. 29. Those cuts will bring to total WaMu workforce down to 11,000.
Market plunge: Stocks are poised for a rebound after falling deeply this week. On Thursday, the S&P 500 plunged to an 11-1/2 year low. Both the Dow and Nasdaq closed at their lowest points since March 12, 2003, which was just above the low of the last bear market.
The drop was fueled by recession fears. The mood was also gloomy with the prospects of an auto bailout this week all but dead. Democratic leaders said Thursday that Congress would return in December to consider extending a $25 billion lifeline for troubled U.S. automakers if the companies devise a "viable" recovery plan.
Companies: Dell (DELL, Fortune 500) reported a decline in quarterly earnings and sales after the market close Thursday. The PC maker said the global economic slowdown has caused consumers and businesses to pull back on technology spending.
Retailer Gap (GPS, Fortune 500) also posted its quarterly financial results late Thursday. The company reported higher quarterly earnings that edged past analysts' estimates.
World markets: After an earlier rally, European markets slipped at midday. London's FTSE index edged down 0.1%, the DAX in Frankfurt fell about 0.6% and the CAC in Paris fell about 0.8%.
Oil, gas and money: Crude prices bounced back from a three-year low. U.S. crude for January delivery, in its first day as the active contract, rose 50 cents to $49.92 a barrel on the New York Mercantile Exchange.
Retail gas prices in the U.S. slid below $2 a gallon for the first time in three and a half years, according to motorist group AAA. At $1.989 a gallon, the nationwide average is down more than 50% from the record hit in July.
The dollar slipped against the euro and the British pound but was higher versus the yen. 
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