Stocks abandon gains
Wall Street gives up early advance as concerns about the economy and the automakers cut into bank sector gains.
NEW YORK (CNNMoney.com) -- Stocks advanced Monday morning on talk that the federal government could take a bigger stake in Citigroup, reassuring shareholders worried about the outlook for the troubled bank.
The Dow Jones industrial average (INDU) lost 15 points, or 0.2%, roughly 45 minutes into the session, after ending last week at the lowest point since Oct. 9, 2002, which was the bottom of the last bear market.
The S&P 500 (SPX) index lost 4 points, or 0.6%, after ending last week at three-month lows.
The Nasdaq composite (COMP) fell 18 points, or 1.3%.
All three major gauges had risen in the first minutes of the session, before turning negative.
Asian stocks ended mixed, with Tokyo's Nikkei index down 0.5%. Major European indexes were higher in afternoon trading.
Peter Cardillo, chief market economist for Avalon Markets, said that stocks were bouncing after a "horrible week," and European stocks were also reacting positively to the Citigroup reports.
Anthony Conroy, head trader at BNY ConvergEx Group, said the government's reported interest in buying up to 40% of Citigroup shares "takes out the question of bankruptcy, so that's a positive."
Also, Conroy said two straight weeks of declines on Wall Street has brought some stock valuations down to irresistible levels.
"There are deals out there, without question," he said.
The Wall Street Journal and The New York Times, citing sources familiar with the matter, reported that the government would convert a large portion of its preferred Citigroup shares - obtained as part of the bank bailout plan - to common shares.
Citi shares rose 6% Monday morning, giving up bigger gains.
Economy: A survey of 47 leading economists by The National Association of Business Economists finds that the recession will deepen before a turnaround begins later this year, projecting stronger-than-average gross domestic product growth in 2010.
The group, which officially determined that the nation entered recession in December 2007, said Monday that the economists see a 5% decline in GDP this quarter and a 1.7% drop in the second quarter. But a pickup will begin in the second half, and growth of 3.1% is seen next year, the economists predict.
Yahoo: A memo distributed to Yahoo (YHOO, Fortune 500) employees by CEO Carol Bartz hints at a reorganization announcement this week, according to a blog affiliated with The Wall Street Journal. AllThingsD said the reorganization could be announced Wednesday, although pieces of the plan may be delayed a week or two.
Yahoo shares rose 1% in early trading.
Looking ahead: The focus this week will be on the president's speech to a joint session of Congress in which he will discuss his proposals to stimulate the economy, end the housing crisis and bail out banks. The speech is scheduled for 9 p.m. ET Tuesday.
Also on tap Tuesday, Federal Reserve Chairman Ben Bernanke gives his semi-annual monetary policy testimony to the Senate Banking Committee.