Wall Street flat as energy offsets Citi worries
NEW YORK (Reuters) - Stocks were little changed on Tuesday as investors followed a two-day slide by snapping up energy shares on a recovery in oil prices while hopes for more funds to stabilize credit markets offset worries about Citigroup's outlook.
A day after Alcoa Inc kicked off what investors fear will be a bleak fourth-quarter earnings season with an unexpectedly large loss, investors scoured the market for beaten-down shares, sending sectors like energy and technology higher.
Shares of Chevron Corp climbed more than 2 percent while rival Exxon Mobil Corp also rose. But a broad advance was limited by a fall in shares of financial services companies as investors fretted about the possibility of more credit losses and uncertainty over Citigroup's outlook.
Hopes that Washington would work speedily on a plea by President-elect Barack Obama for the remaining $350 billion of financial rescue funds to stabilize credit markets helped underpin sentiment, however.
"Obama is in a much better position to work with Congress than the previous administration," said Gail Dudack, chief investment strategist at Dudack Research Group in New York. "The market wants to see some very pragmatic action, and Obama is trying to do that."
The Dow Jones industrial average dipped 12.58 points, or 0.15 percent, to 8,461.39. The Standard & Poor's 500 Index inched up 0.30 points, or 0.03 percent, to 870.56. The Nasdaq Composite Index gained 7.87 points, or 0.51 percent, to 1,546.66.
Chevron shares rose as high as $72.70 on the New York Stock Exchange before slipping back to be up 1.4 percent at $71.82, while Exxon Mobil climbed 1.6 percent. On Nasdaq shares of Microsoft climbed 2.1 percent to $19.89.
Investors drew comfort from comments by Federal Reserve Chairman Ben Bernanke that the government could consider buying troubled assets. News the U.S. trade deficit had its biggest contraction in 12 years in November also lent support.
"Trade numbers came out a bit better than expected, which is also helpful because of course trade numbers are a piece of the gross domestic product," said Dudack.
Embattled bank Citigroup is pushing ahead with a plan to sell a controlling stake in its Smith Barney retail brokerage, a crown jewel, and analysts suggested it must be urgently seeking to replenish capital due to mounting losses.
Citigroup shares were down 3.8 percent to $5.39 on the New York Stock Exchange. U.S. front-month crude was up $1.15 at $38.70 a barrel.
Obama, who is due to be sworn in on January 20, is pushing for Congress to release the remaining $350 billion of the $700 billion financial industry bailout. Obama wants the aid to go to consumers threatened by home mortgage foreclosures and plans to meet Tuesday with Senate Democrats to seek their support.
(Editing by James Dalgleish)