U.S. stocks finished mixed Tuesday, with the blue-chip Dow Jones industrial average underperforming the broader market in slow trading. Equity investors appeared to be taking a breather from a recent three-month rally.
Texas Instruments (TXN) led technology issues higher on a stronger-than-expected second-quarter earnings forecast.
Higher gold and crude oil prices shored up mining and oil-related equities, including Hess Corp. (HES) and Chevron Corp. (CVX). Financial stocks were mixed after the Treasury Dept. said it will allow 10 large institutions to repay bailout loans.
Treasury Secretary Timothy Geithner told the Senate Appropriations Committee he saw improvement in the economy and financial system but warned that much work needs to be done.
On Tuesday, the 30-stock Dow Jones industrial average finished lower by 1.43 points, or 0.02%, at 8,763.06. The broad S&P 500 index was up 3.29 points, or 0.35%, at 942.43. The tech-heavy Nasdaq composite index gained 17.73 points, or 0.96%, to 1,860.13.
The stock market believes the recession has bottomed out, and has discounted a strong recovery, according to S&P MarketScope.
Treasuries were mixed despite strong demand for the government's auction of $35 billion in three-year notes, with the yield on the 10-year note rising to 3.87%.
The dollar index was off at 80.00.
Gold was higher at $955.40 per ounce.
Crude oil futures rose to $69.72 per barrel.
London stocks fell 0.01%, Paris rose 0.21%, and Frankfurt fell 0.14%. Tokyo's benchmark index fell 0.80% and Hong Kong declined 1.07%, while Shanghai stocks rose 0.71%.
Much of the near term focus will remain on the financial sector as banks line up to return TARP funds and clean up their boardrooms. The calendar through the rest of the week includes another Fed buybacks, more Treasury issuance, the Fed Beige Book and May retail sales.
U.S. wholesale sales fell 0.4% in April, while inventories dropped 1.4%. The 2.4% drop in sales in March was not revised, but the 1.6% decline in March inventories was revised lower to -1.8%. The inventory-sales ratio narrowed a tad to 1.31 from 1.32 in March. The data are close to expectations and shouldn't have market impact, but will help economists fine tune GDP forecasts.
The Treasury gave the go-ahead to 10 large financial institutions to repay $68 billion in TARP loans they received as part of the government's bank bailout program. "These repayments are an encouraging sign of financial repair, but we still have work to do," said Geithner in a statement. JPMorgan Chase (JPM), Goldman Sachs Group (GS), and eight other institutions were approved to repay billions of dollars in government money they received, in part because they have issued long-term debt. Ten other financial institutions, including Bank of America (BAC)
and Citigroup (C) have a longer road to recovery. They submitted plans for raising capital to the Fed on Monday. Other smaller banks have also returned bank bailout funds, bringing the total in returns to $70 billion.
On June 10, the Treasury will likely release its guidelines for executive compensation at banks that retain government shares, a person familiar with the matter said.
Geithner cited signs of improvement in the economy and financial system in testimony at a Senate Appropriations Committee hearing on Tuesday, but said the challenges remained substantial. He also said the PPIP to remove toxic debt was about to go forward, while new systemic rules would be laid out within weeks to discourage large firms from taking too much risk. Geithner plans to streamline the out of date regulatory system as well and vowed to get the U.S. fiscal house in order, working with congress to "make tax changes needed to cut deficits."
Chrysler LLC creditors won what may prove to be a fleeting victory in their drive to stop the automaker's planned sale of its best assets to a group led by Italy's Fiat SpA. Bloomberg News reports a Supreme Court order yesterday delaying the sale provided no assurance that the court will grant the creditors the longer postponement they seek or even consider the merits of their arguments.
The International Council of Shopping Centers (ICSC) and Goldman Sachs weekly chain store retail sales index rose 0.2% in the week ended June 6. But on a year-over-year basis, sales declined by 0.8%, which was the largest decrease in five weeks.