Stocks mixed at the open

ROAD TO RESCUE

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• Banker: "TARP helped avert a global calamity"

Grim outlook for earnings

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NEW YORK (CNNMoney.com) -- Stocks were mixed Tuesday morning as investors considered Alcoa's discouraging start to the quarterly reporting period, a big drop in the trade deficit and Federal Reserve chairman Ben Bernanke's comments on the economy.

The Dow Jones industrial average (INDU) and the Standard & Poor's 500 (SPX) index were both little changed in the early going. The Nasdaq composite (COMP) inched higher.

Stocks tumbled Monday as worries about Citigroup and the start of the quarterly earnings reporting period weighed on sentiment.

Art Hogan, chief market strategist for Jefferies & Co., said the markets have been weighed down by depressing economic reports such as Friday's report showing a loss of 2.6 million jobs in 2008.

"The economic calendar has been nothing short of abysmal," said Hogan. "It's hard to look at this with rose-colored glasses."

Dave Rovelli, managing director for Canaccord Adams, said the Dow, which slipped beneath 8,500 on Monday, needs to get back above that psychological benchmark as soon as possible.

"A lot of people think if we don't regain that in the next day or so, we'll go a lot lower," said Rovelli.

Before the start of trading, the government reported that the trade deficit fell to $40.4 billion in November. Imports plunged 12%, partly because of the dropping oil prices.

Earnings: Dow component Alcoa (AA, Fortune 500) kicked off the earnings reporting period on a dour note. The aluminum producer posted a wider-than-expected loss after U.S. markets closed Monday.

"Unfortunately, the optimism ran smack dab into reality here," said Hogan. "Alcoa certainly didn't start the season off with a bang."

Investors are bracing for more pain. Other major companies reporting this week include JP Morgan Chase (JPM, Fortune 500) and Intel (INTC, Fortune 500). Both firms release results Thursday.

Also, the Japanese consumer electronics giant Sony (SNE) will likely experience an annual operating loss of about $1.1 billion because of sluggish sales, its first loss in 14 years, according to a Reuters report. The stock fell more than 4% in pre-market trading.

Rovelli of Canaccord Adams said the markets were also being squeezed by speculation that Citigroup (C, Fortune 500) was planning to sell a stake in its Smith Barney brokerage division to Morgan Stanley (MS, Fortune 500). This triggered a 17% plunge in Citi stock on Monday.

"Citigroup is going to sell 50% of their crown jewel to save money; it's just not a good sign for the market," said Rovelli. "Everybody's real nervous about Citigroup."

Economy: In his opening comments at a speech in London on Tuesday, Federal Reserve chairman Bernanke said the $800 billion stimulus plan being considered by President-elect Barack Obama "could provide a significant boost to economic activity."

But he also said that additional bailouts of financial institutions may be needed to sustain the recovery.

The Treasury's December budget balance comes out at 2 p.m. ET.

Also at 2 p.m. ET, the House Financial Services Committee will hold a hearing on the way funds for the Treasury's Troubled Asset Recovery Program are being spent. On Monday, President-elect Barack Obama asked Congress to release the remaining $350 billion in TARP funds.

World markets: Asian markets ended lower, with Japan's Nikkei falling nearly 5%. European stocks were lower in afternoon trading.

Oil and money: Oil prices declined further, despite unrest in the Middle East, as investors remained concerned about weakening demand.

U.S. light crude for February delivery fell 20 cents to $37.39 a barrel on the New York Mercantile Exchange.

The dollar was higher versus major international currencies, including the euro, the yen and the British pound.