Stocks can't sustain rally
After four up sessions, Wall Street takes a breather, with techs leading the downturn.
NEW YORK (CNNMoney.com) -- Stocks finished lower Monday, ending a 4-session winning streak, as tech selling countered a bank share-led rally.
Stocks had gained through the early afternoon on a jump in bank shares and some upbeat comments from Federal Reserve Chairman Ben Bernanke. But the advance lost steam late in the afternoon, with investors pulling back after four sessions of gains last week.
"There's some optimism in the market, but it hasn't been a massive push out of cash and into equities," said Paul Brigandi, vice president of trading at Direxion Funds. "Investors are still proceeding with caution. They want to see that it's not just a bear market rally before they commit more."
Stocks rallied last week, bouncing back after the Dow and S&P 500 hit 12-year lows. The week was Wall Street's best since last November, as the Dow gained 9%, the S&P 500 rose 10.7% and the Nasdaq added 10.6%.
Bernanke's comments and some encouraging news from the bank sector helped pace the advance by building confidence.
"Sentiment was really negative a week ago, and so each day the market goes up, the sentiment improves," John Forelli, portfolio manager at Independence Investments said.
Forelli said the advance could continue in the short run if investors can believe the economy is in the healing process. Yet, the run is bound to hit some speed bumps when quarterly results start pouring in next month.
"If you thought the fourth-quarter earnings were bad, get ready for the first quarter," he said.
Tuesday also brings reports on housing starts and building permits, as well as the Producer Price Index (PPI), a measure of wholesale inflation.
Alcoa (AA, Fortune 500) was among the stocks likely to be active Tuesday. After the close Monday, the aluminum maker and Dow component said it will cut its dividend, issue stock and convertible notes worth about $1.1 billion and cut its spending in 2010 amid the slowdown. Shares plunged 10% in extended-hours trading.
Banks: British bank Barclays (BCS) joined the list of companies saying it had a good start to the year.
But after rallying through the early afternoon, bank stocks ended mixed. Citigroup (C, Fortune 500) rose 31% and Bank of America (BAC, Fortune 500) gained 7.3%. But Goldman Sachs (GS, Fortune 500), Morgan Stanley (MS, Fortune 500) and others abandoned gains as the market turned lower.
Market breadth was mixed. On the New York Stock Exchange, winners beat losers by three to two on volume of 1.9 billion shares. On the Nasdaq, decliners topped advancers five to four on volume of 2.17 billion shares.
Bernanke: Speaking on CBS's "60 Minutes" this weekend, Federal Reserve Chairman Ben Bernanke said that the recession will "probably" end this year if the government is successful in stabilizing the flailing banking system.
The Fed is meeting Tuesday and Wednesday to discuss interest rates, with an announcement expected Wednesday afternoon. The central bank is expected to hold the fed funds rate, its key short-term interest rate, essentially at zero.
However, the Fed could announce that it's going to start buying long-term U.S. Treasurys after saying it was prepared to do so at its last few meetings.
Obama: President Obama said he will try to block millions in bonuses paid to AIG executives, which were given even as the company received $170 billion in federal bailout money.
The president, along with Treasury Secretary Timothy Geithner, also announced new efforts to increase loans for small businesses. (Full story)
G-20: Finance ministers of the Group of 20 industrialized nations meeting over the weekend promised to do whatever is necessary to fix the global economy and repair the shaky banking system. The group also backed increased support for emerging markets.
But the group remained wary of a U.S. proposal for a broader coordinated government spending plan to stimulate global economies. A summit of the group's national leaders is scheduled in London on April 2.
Economy: Industrial production continued to decline last month, as the recession wore on. The government said production fell by a seasonally adjusted 1.4% in February versus forecasts for a fall of 1.3%. Production fell 1.9% in the previous month.
Capacity utilization, a measure of factory output, fell to 70.9% from 71.9% in January. Economists surveyed by Briefing.com thought it would fall to 71%.
The NY Empire State index, a key regional manufacturing report, fell to a record low of negative 38.2 in March from negative 34.7 in February.
Bonds: Treasury prices inched lower, raising the yield on the benchmark 10-year note to 2.95% from 2.90% Friday. Treasury prices and yields move in opposite directions.
Lending rates were little changed. The 3-month Libor rate fell to 1.31% from 1.32% Friday, while the overnight Libor rate held at 0.33%, according to Bloomberg.com. Libor is a bank-to-bank lending rate.
Other markets: In global trading, Asian and European markets ended higher.
In currency trading, the dollar fell versus the euro and gained against the yen.
U.S. light crude oil for April delivery rose $1.10 to settle at $47.35 a barrel on Monday.
COMEX gold for April delivery fell $8.10 to settle at $922 an ounce.