Choppy session on Wall Street
Stocks sway on stimulus debate while bank stocks rally for the third session ahead of the bailout plan.
NEW YORK (CNNMoney.com) -- Financial shares rallied Monday, but the broader market struggled as the announcement of the overhaul of the bank bailout was delayed and Congress continued to squabble about the stimulus package.
The Dow Jones industrial average (INDU) lost 9 points or 0.1%. The Standard & Poor's 500 (SPX) index added 1 point or 0.1%. The Nasdaq composite (COMP) was barely changed.
"People were expecting to get the details about the bank bailout plan today, and the delay means the market has no real catalyst one way or the other," said John Forelli, portfolio manager at Independence Investments.
He said that once the new version of the bailout plan is announced and once Congress agrees on a stimulus plan, stocks should get a boost.
"These two programs are good indications that the new administration is willing to throw money at the problem, which should be reassuring to the market," he said.
Stocks rallied Friday as optimism about the government's economic stimulus bill and the new version of the bank bailout plan countered unease following the brutal January jobs report. All three major gauges ended higher for the week, ending a four-session losing streak.
But after such a run, stocks were vulnerable to selling pressure Monday.
Monday night, President Obama is expected to speak about the economy, staring at 8:00 p.m. ET.
Economic stimulus: The Senate has reached a tentative agreement on a new version of the economic stimulus bill. After more than a week of heated debate, lawmakers have reportedly managed to cut the proposed $900 billion plan down to $827 billion. A vote is expected Tuesday.
However, Senate approval of the plan is just another step in the process. The House of Representatives already approved an $819 billion version of the plan in a party-line vote nearly two weeks ago.
If the Senate bill passes, leaders will need to negotiate a final bill with the House. (Here's how the plans differ.)
TARP reform: Treasury Secretary Tim Geithner was expected to speak Monday about how the government plans to use the remaining $350 billion of the Treasury's Troubled Asset Relief Program (TARP).
However, the speech was postponed until Tuesday so as to keep the focus on the stimulus plan.
Market pros think Geithner might announce the creation of a so-called "bad bank" that would let the government remove bad assets from bank balance sheets. This would purportedly get banks to start lending again.
Another possibility is that the Treasury could suspend or change the "mark-to-market" accounting rule, meaning the government could buy the assets at a price that is below market rate, but not at fire sale prices.
Such a change would address criticisms that the Bush administration overpaid for the bad assets it bought with the first half of the TARP.
"The benefit that the current administration has is to see what didn't work with the first half of the TARP," said Dan Genter, president and CEO at RNC Genter Capital Management.
He said that depending on what the new plan includes, "it could bring a lot more stability to the market place."
Financial shares: Bank shares continued to rally after Friday's advance, ahead of the latest TARP news.
Large banks such as Bank of America (BAC, Fortune 500) and Morgan Stanley (MS, Fortune 500) advanced modestly. But smaller banks rallied more sharply, including Fifth Third (FITB, Fortune 500), Huntington Bancshares (HBAN) and Regions Financials (RF, Fortune 500).
Barclay's (BCS) posted a better-than-expected 2008 profit as a one-time gain from its purchase of the North American operations of Lehman Brothers helped temper massive writedowns. Shares jumped 11%.
Shares of NYSE Euronext (NYX) fell after the operator of the New York Stock Exchange and the Euronext stock exchanges posted a big quarterly loss.
Hartford Financial Services (HIG, Fortune 500) and Genworth Financial (GNW, Fortune 500) were among the life insurance stocks rallying on hopes that requests for aid from the bank bailout plan could soon arrive.
General Electric (GE, Fortune 500) also rallied in tune with the financial sector.
Other company news: Nissan (NSANY) warned that it will post a loss for its current fiscal year and that it will cut 20,000 jobs.
General Motors (GM, Fortune 500) is reportedly in discussions to take back part of Delphi, the auto-parts supplier it spun off a decade ago. The move is part of the company's plans to line up additional bailout funds from the government, which has already given the company more than $13 billion. Other reports said GM could be planning to cut up to 5,000 salaried workers.
Market breadth was mixed. On the New York Stock Exchange, winners beat losers by eight to seven on volume of 1.26 billion shares. On the Nasdaq, decliners topped advancers by eight to seven on volume of 1.88 billion shares.
Bonds: Treasury prices slipped, raising the yield on the benchmark 10-year note to 2.99% from 2.98% Friday. Treasury prices and yields move in opposite directions.
Lending rates were mostly unchanged. The 3-month Libor rate slipped slightly to 1.23% from 1.24% Friday, according to Bloomberg.com. The overnight Libor rate held steady at 0.31%. Libor is a bank lending rate.
Other markets: In global trading, Asian markets were mixed and European markets ended higher.
The dollar fell against the euro and yen.
U.S. light crude oil for March delivery fell 61 cents to settle at $39.56 a barrel on the New York Mercantile Exchange.
COMEX gold for April delivery fell $21.50 to settle at $892.80 an ounce.
Gasoline prices rose three-tenths of a cent to a national average of $1.924 a gallon, according to a survey of credit-card swipes released Monday by motorist group AAA. 
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