Stocks struggle after rally

NEW YORK (CNNMoney.com) -- Stocks slipped Wednesday, falling after a two-session rally, amid weakness in banks, concerns about Toyota and questions about the outlook for the labor market.

Also, a rally in the U.S. dollar dragged on dollar-traded commodity stocks.

The Dow Jones industrial average (INDU) lost 26 points, or 0.3%, according to early tallies. The S&P 500 index (SPX) fell 6 points, or 0.6%. The Nasdaq composite (COMP) was little changed.

After the close, Cisco Systems (CSCO, Fortune 500) and chipmaker Novellus (NVLS) reported better-than-expected quarterly sales and earnings.

Stocks started the first two days of February with a rally, following a January slump that was Wall Street's worst month since February 2009.

Worries about China's bank lending curbs and the Obama administration's plans to restrict bank trading led the January selloff. But investors may also have been pleading exhaustion after a big rally in 2009, in which the S&P 500 gained 23.4%.

"The tone of the market is not as good right now as it was last year," said Will Hepburn, chief investment officer at Hepburn Capital Management. He said that asset deterioration and worries about the ballooning deficit are overshadowing improved profit reports.

Meanwhile, investors are looking for more indications that a recovery is taking hold, after pushing stocks higher last year in anticipation of such a rebound.

Among stock movers, financial shares slipped, with the KBW Bank (BKX) sector index falling 2%. Wells Fargo lost 2% and a number of the regional banks declined as well, including Fifth Third Bancorp (FITB, Fortune 500), Regions Financial (RF, Fortune 500) and SunTrust.

Jobs market: Investors considered a pair of employment reports that painted a mixed picture ahead of Friday's big January jobs reading from the government.

Payroll services firm ADP reported that employers in the private sector cut 22,000 jobs in January following a revised loss of 61,000 jobs in December. Economists surveyed by Briefing.com had forecast a loss of 30,000.

Meanwhile, outplacement firm Challenger, Gray & Christmas reported that announced layoffs in January rose to a five-month high of 71,482 from 45,094 in December.

In other economic news, the Institute for Supply Management's services sector index rose to 50.5 in January from 49.8 in the previous month. Economists had thought it would rise to 51.

Quarterly profits: Dow component Pfizer (PFE, Fortune 500) reported higher quarterly earnings that missed estimates, on higher revenue that topped estimates. The drugmaker, which finished its $67 billion purchase of fellow drugmaker Wyeth in October, also forecast 2010 earnings that are short of analysts' estimates.

Looking out further, Pfizer forecast 2011 revenue that is in line with estimates and 2012 revenue that is short of its forecast from a year ago. Shares fell 3%.

Time Warner (TWX, Fortune 500) reported sales and earnings that rose from a year ago, in its first quarterly report without AOL in a decade. The media company, which is the parent of CNNMoney.com, benefited from strength in its TV and movie divisions, as well as some cost cutting at its Time Inc. brand. Time Warner also raised its dividend.

Shares fell 2%.

AOL (AOL) -- in its first quarter in a decade as a stand-alone Internet company -- said it swung to a profit of $1.4 billion from a loss of $1.9 billion a year ago. Shares were little changed.

News Corp. (NWS, Fortune 500) reported quarterly earnings and revenue after the close Tuesday that jumped from a year earlier and topped expectations. Shares gained 6% Wednesday.

Among other movers, McDonald's (MCD, Fortune 500) shares rose 2% after Goldman Sachs reportedly added it to its Americas conviction buy list, saying it expects earnings growth at the company in 2010.

Toyota: Shares of Toyota (TM) slumped 6% after Department of Transportation Secretary Ray LaHood told a Congressional panel that owners of recalled Toyotas should take them to a dealer for repairs.

On Monday, the automaker said it will fix millions of gas pedals in recalled vehicles, eliminating a problem that caused the pedals to stick, which prompted the recall of 2.3 million vehicles in the United States. Toyota also recalled over five million vehicles due to risks that floor mats could become stuck on floor pedals.

The company is also now facing numerous complaints about brake problems in its 2010 Prius.

World markets: In overseas trading, Asian markets ended higher, gaining for a third straight session after last week's selloff. European markets fell in late trading.

Commodities and the dollar: The dollar gained versus the euro and the yen.

COMEX gold for April delivery fell $6 to $1,111.40 an ounce.

U.S. light crude oil for March delivery fell 25 cents to $76.98 a barrel on the New York Mercantile Exchange.

Bonds: Treasury prices tumbled, raising the yield on the 10-year note to 3.69% from 3.64% late Monday. Treasury prices and yields move in opposite directions.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by almost three to two on volume of 700 million shares. On the Nasdaq, decliners topped advancers three to two on volume of 1.76 billion shares. 

Stocks may struggle to extend rally

NEW YORK (CNNMoney.com) -- U.S. stocks look like they may struggle to extend their recent rally on Wednesday as investors look to add another session of gains amid jobs reports.

Dow Jones industrial average, Standard & Poor's 500 and Nasdaq 100 futures were all slightly higher on Wedneday morning.

Futures measure current index values against perceived future performance and offer an indication of how markets may open when trading begins in New York.

A rally on Wall Street helped the blue-chip Dow post its second straight gain of more than 100 points on Tuesday. Stocks have gained recently amid solid earnings and signs of stabilization in the economy.

"Yesterday, we saw triple digit increases in the market," said Derek Hoffman, chief executive of Wall St. Cheat Sheet. "I'd say that's attributable to positive earnings reports."

Hoffman said that futures are being buoyed by strong earnings from Time Warner and News Corp., as well as strong sales from Ford Motor Co. (F, Fortune 500)

Jobs: Two reports on employment come out before U.S. markets open Wednesday.

Outplacement firm Challenger Gray and Christmas reported that January job cuts surged to a five-month high of 71,482. That's closely followed by payroll processing firm ADP's reading on private sector jobs.

Earnings: Media giant Time Warner (TWX, Fortune 500) posted quarterly earnings of $627 million before the opening bell, or 53 cents per share, which was better than expected. The stock moved up slightly in pre-market trading.

Time Warner owns HBO and CNN, as well as Warner Brothers and an array of magazines. It is also the parent of CNNMoney.com.

AOL (AOL) also reported earnings -- its first time since it regained its independence from Time Warner. The company said it swung to a profit of $1.4 million in the fourth quarter even though sales fell 17% to $809.7 million.

Companies: Troubles keep growing for Toyota Motor (TM). U.S. federal investigators are looking into whether electronics caused the problem with the automaker's recalled gas pedals.

World markets: Asian shares gained. The Hang Seng in Hong Kong soared 2.2%. Gains in Japan were more modest, with the Nikkei adding 0.3%. In Europe, major indexes rose slightly in midday trading.

Cash and bonds: The dollar fell versus most international currencies, but rose against the yen. The price of the 10-year note rose, pushing down the yield to 3.66%.

Oil and gold: Oil prices edged up 10 cents per barrel to $77.33. Oil climbed above $77 a barrel Tuesday amid anticipation that crude supplies fell more than expected last week.

Gold prices slipped 50 cents per troy ounce to $1,116.90. 

Dow: Triple-digit gain for 2nd day

NEW YORK (CNNMoney.com) -- Stocks rallied Tuesday, with the Dow Jones industrials posting their second straight triple-digit gain, as investors welcomed better-than-expected corporate results, signs of stability in the housing sector and solid auto sales.

The Dow (INDU) rose 111 points, or 1.1%. The S&P 500 index (SPX) gained 14 points, or 1.3%. The Nasdaq composite (COMP) rallied 18 points, or 0.9%.

Treasury prices rose, lowering the corresponding yields, while a weaker dollar lifted commodity stocks.

Stocks are rising this week as investors step back in after a two-week selloff that saw the S&P 500 lose almost 7%. Worries about President Obama's plan to limit trading at big banks, China's lending curbs and global debt worries all led to the selloff.

While the concerns haven't disappeared, investors nonetheless used the selloff as an opportunity to dip back into stocks at a lower level.

"We're seeing a little bounce here, but I think we could still see more selling in the short term," said Dave Hinnenkamp, CEO at KDV Wealth Management.

He said fourth-quarter earnings have been strong, but that was already anticipated by investors and is having little impact on the broad market.

"People are focusing on the outlook for banks, China and the deficit, and not really paying attention to the earnings," he said.

Gains were broad based Tuesday, with 28 of 30 Dow stocks rising, including Alcoa (AA, Fortune 500), which was upgraded by Citigroup.

Auto sales: Major automakers, including Ford Motor (F, Fortune 500), General Motors and Nissan all reported improved January sales. However, Toyota (TM), which earlier this month recalled millions of cars due to a faulty gas pedal, saw a bigger-than-expected decline in January sales.

Corporate results: UPS (UPS, Fortune 500) reported lower quarterly revenue and earnings versus a year earlier, but the results topped analysts' expectations. The company also issued a 2010 earnings forecast of $2.70 to $3.05 per share, up from 2009. Analysts are expecting $2.81 per share. Shares were little changed in the early going.

Homebuilder D.R. Horton (DHI, Fortune 500) reported quarterly earnings of 56 cents per share in its fiscal first quarter, surprising analysts who thought it would report a loss. The company benefited from a big tax gain. The company also said new orders and completed sales rose significantly in the quarter. Shares gained 10% in active New York Stock Exchange trading.

Emerson Electric (EMR, Fortune 500), a maker of automation systems for a broad range of companies, reported weaker quarterly sales and earnings that surged past forecasts. Shares gained 8%.

With around 48% of the S&P 500 having reported results, earnings are currently on track to have risen 204% from the prior year, according to the latest estimates from Thomson Reuters. But the improvement is mostly because of cost-cutting and easy comparisons to a wretched fourth quarter of 2008.

The financial sector is expected to lead the advance, rising 73% versus a year earlier. Strip out financial sector results and earnings are only expected to rise 15%.

Revenue is set to rise about 8% year over year. Excluding financial firms, revenue is expected to rise about 3%.

Housing: The National Association of Realtors' pending home sales index rose 1%, in line with expectations. The index fell 16.4% in the previous month.

Washington: The Senate Budget Committee held a hearing on the 2011 budget. In his testimony, Treasury Secretary Timothy Geithner said a bipartisan effort is needed to trim a deficit the Obama White House mostly inherited from the Bush administration. He said the economy is recovering, but it will take time for the private sector to create new jobs.

Volcker: Testifying at a Senate Banking Committee meeting, White House economic adviser Paul Volcker sought to expand on Obama's call for greater limitations on bank trading.

Last week, Obama called for limiting commercial banks ability to make high-risk trades and stopping them from owning or investing in hedge funds. The change is seen as a throwback to a Depression-era law that was essentially tossed out a decade ago.

The former Federal Reserve Chairman said limiting banks from engaging in certain high-risk trades would limit the number of institutions that are deemed to be "too big to fail.

World markets: In overseas trading, Asian markets ended higher, gaining for a second week in a row after last week's selloff. European markets also ended higher.

Commodities and the dollar: The dollar fell versus the euro and the yen.

COMEX gold for April delivery rose $13.10 to settle at $1,117.40 an ounce.

U.S. light crude oil for March delivery added $2.80 to settle at $77.23 a barrel on the New York Mercantile Exchange.

Bonds: Treasury prices rose, lowering the yield on the 10-year note to 3.64% from 3.65% late Monday. Treasury prices and yields move in opposite directions.  

Stocks set to edge higher

NEW YORK (CNNMoney.com) -- U.S. stocks looked set for a slightlly higher start Tuesday, with investors awaiting auto sales and a Senate hearing on proposed new rules on financial reform.

Dow Jones industrial average, Standard & Poor's 500 and Nasdaq 100 futures were narrowly higher.

Futures measure current index values against perceived future performance and offer an indication of how markets may open when trading begins in New York.

Wall Street bounced back from two-month lows on Monday, with stronger-than-expected readings on the economy -- including personal income, manufacturing and Exxon Mobil's (XOM, Fortune 500) profit -- helping to fuel the rally.

"There's a little bit of change in tone this week," said Art Hogan, chief market strategist at Jefferies & Co., constrasting the recent gains to last week's "drubbing."

"We think things are not quite as dire as the market has been playing out," he said. "This year's earnings season has been much better than expected."

Hogan said 78% of the companies that have reported fourth-quarter earnings so far have beat expectations, helping to lift investor confidence.

Economy: On Tuesday, investors will look to auto sales, which are due out in the middle of the day. A reading on pending home sales also is on tap.

Banks: Former Fed chairman Paul Volcker is due to testify before the Senate Banking Committee at a hearing on financial reform.

The hearing is expected to clear up some of the uncertainty over limits on banks proposed by President Obama last month.

Companies: The onslaught of corporate reports goes on, with Archer Daniels Midland (ADM, Fortune 500), Dow Chemical (DOW, Fortune 500) and UPS (UPS, Fortune 500) among the firms slated to release their financial results.

World markets: Asian shares climbed, with Japan's Nikkei adding 1.6%. Major European indexes edged higher in midday trading.

Cash and bonds: The dollar was mixed against other currencies, slipping versus the euro and the yen but rising against the pound. The price of the 10-year note fell, pushing up the yield to 3.65%.

Gold and oil: The price of gold rose $10.40 per ounce to $1,114.70. The price of oil rose 81 cents to $75.24 per barrel. 

Stocks bounce after battering

NEW YORK (CNNMoney.com) -- Stocks surged Monday, starting off a new month with strong gains, as investors welcomed better-than-expected reports on personal income, manufacturing and Exxon Mobil's profit.

The Dow Jones industrial average (INDU) rose 118 points, or 1.2%. The S&P 500 index (SPX) gained 15 points, or 1.4%. The Nasdaq composite (COMP) added 24 points, or 1.1%.

Wall Street ended one of the worst months in nearly a year Friday, with the Dow, S&P 500 and Nasdaq all closing at two-month lows. President Obama's plan to restrict trading at big banks, China's bank lending curbs and global debt worries all rattled investors.

But investors used the selloff as an opportunity to get back into stocks Monday, continuing last year's trend.

"People getting in at these levels are assuming that this is another of the mini-corrections we've seen over the last 11 months, but I would be skeptical," said Paul Brigandi, vice president of trading at Direxion Funds.

He said that with the market up more than 50% from the lows of last March, a correction of 10% to 15% was not out of the question. Between the high on Jan. 19 and Friday's lows, the S&P 500 lost just under 7%.

Looking forward, "I think you could see a deeper selloff," Brigandi said.

Gains were broad based, with 28 of 30 Dow components rising, led by Boeing (BA, Fortune 500), Caterpillar (CAT, Fortune 500), Chevron (CVX, Fortune 500), Hewlett-Packard (HPQ, Fortune 500), IBM (IBM, Fortune 500), McDonald's (MCD, Fortune 500) and Exxon Mobil (XOM, Fortune 500).

Quarterly results: Exxon Mobil reported a profit of $6.05 billion or $1.27 per share, down about 18% from the fourth quarter of 2008 when oil prices were lower and fuel demand was higher. Nonetheless, results topped the forecasts of analysts surveyed by Thomson Reuters.

With around 45% of the S&P 500 having reported results, earnings are currently on track to have risen 206% from a year ago, according to the latest from Thomson Reuters. But the rise is mostly due to cost-cutting and easy comparisons to an abysmal fourth quarter of 2008.

The financial sector in particular is set to bounce back. Strip out financial sector results and earnings are only expected to rise 15%.

Revenue is set to rise about 7% year over year. Without financials, revenue is expected to rise about 2%.

Budget: President Obama unveiled a $3.8 trillion budget for 2011 on Monday that looks to both support the still-fragile economy and temper the nation's growing deficit.

Economy: Personal income rose 0.4% in December, the Commerce Department reported, surprising economists who were looking for an increase of 0.3% on average, according to Briefing.com estimates. Income rose 0.5% in the previous month.

Personal spending rose 0.2% after rising 0.3% in the previous month. Economists thought it would rise 0.3% in December.

The Institute for Supply Management's manufacturing index rose to 58.4 in January from 54.9 in December. Economists thought it would rise to 55.5.

Construction spending fell 1.2% in December, worse than the drop of 0.5% economists were expecting. Spending fell 1.2% in November.

Toyota: On Monday, the company announced plans to fix millions of gas pedals in recalled vehicles and said it has already shipped out parts to dealers.

The fix eliminates the problem that caused pedals to stick, which prompted the recall of 2.3 million vehicles in the United States. Toyota (TM) shares gained 3.8%.

World markets: In overseas trading, Asian markets ended higher, rebounding after last week's selloff. European markets gained, with the London FTSE up 1.1%, the German DAX up 0.8% and the French CAC 40 up 0.6%.

Commodities and the dollar: The dollar fell versus the euro and gained versus the yen.

COMEX gold for February delivery rose $21.30 to settle at $1,104.30 an ounce. Gold closed at an all-time high of $1,218.30 an ounce last month.

U.S. light crude oil for February delivery added $1.54 to settle at $74.53 a barrel on the New York Mercantile Exchange.

Bonds: Treasury prices fell, raising the yield on the 10-year note to 3.65% from 3.58% late Friday. Treasury prices and yields move in opposite directions.

Market breadth was positive. On the New York Stock Exchange, winners beat losers nearly four to one on volume of 1.04 billion shares. On the Nasdaq, advancers beat decliners eight to five on volume of 2.23 billion shares. 

Stocks ready to claw back

NEW YORK (CNNMoney.com) -- U.S. stocks were poised to kick off the new month on a brighter note Monday as investors consider the release of the Obama administration's new budget, and as Toyota unveiled its plan to fix gas pedals for millions of vehicles.

Dow Jones industrial average, Standard & Poor's 500 and Nasdaq 100 futures were higher.

Futures measure current index values against perceived future performance and offer an indication of how markets may open when trading begins in New York.

Wall Street had one of its worst months in nearly a year in January, as bank lending curbs in China, President Obama's plan to limit big banks and debt worries rattled investors.

Mark Luschini, chief investment strategist for Janney Montgomery Scott, said President Obama is helping to influence investor sentiment toward the positive, with his focus on the job creation aspects of the stimulus plan.

"The announcement that's expected to come out [from Obama on Monday] is focused on what's important, which is creating jobs," he said. "He's going to be focused on what the market wants to hear most, which is something directed at the job market."

Economy: President Obama on Monday will reveal a $3.8 trillion budget for 2011 that tries to balance the competing goals of continued government spending to boost the fragile economic recovery and controlling the nation's deficit. The president is due to highlight his budget priorities in a speech at 10:45 a.m. ET.

A report on personal income showed an increase of 0.4% for December. This was more than the 0.3% increase that was expected by a Briefing.com consensus of economists. Also, personal spending edged up 0.2% in December, falling short of the 0.3% increase forecast.

Readings on construction spending and nationwide manufacturing also are on tap.

Companies: Toyota on Monday unveiled details of its plan to fix millions of recalled gas pedals, and said it has already shipped out the new parts.

The automaker has recalled 2.3 million vehicles in the U.S. over a gas pedal that could stick in some circumstances as it becomes worn out.

World markets: In Asia, Japan's Nikkei managed slim gains. Major European indexes were higher in midday trading, reversing course after a slump earlier in the day.

Cash and bonds: The dollar was mixed versus other currencies, slipping against the euro and the yen but rising against the pound. The price of the 10-year note rose, pushing down the yield to 3.61%.

Oil: The price of oil rose 70 cents per barrel to $73.59. 

Stocks: New month, same worries

Stocks manage gains after Fed

NEW YORK (CNNMoney.com) -- Stocks climbed Wednesday, ending a choppy session higher after the Federal Reserve held interest rates steady and hinted it would continue to do so for the foreseeable future. Meanwhile, Apple introduced its new iPad tablet computer.

The Dow Jones industrial average (INDU) gained 42 points, or 0.4%. The S&P 500 index (SPX) gained 5 points, or 0.5%. The Nasdaq composite (COMP) rose 18 points, or 0.8%.

Stocks churned before and after the Fed statement, with gains in technology, telecom and financial stocks tempered by weakness in industrials and commodities. The bank sector surged, with the KBW Bank (BKX) index rising 2.9%.

Apple's new iPad, a crop of major earnings and a House hearing on the government bailout of AIG were also in focus.

Stocks may have staged the late-session advance in anticipation of President Obama's pending State of the Union address, said Michael Sheldon, chief market strategist at RDM Financial Group.

"Some investors may be looking ahead to a less combative and more constructive speech tonight," Sheldon said. "In addition, the market has also had a pretty sharp downdrift over the last few days."

Following that selloff, investors were perhaps willing to scoop up some of the shares that got pummeled.

Ford Motor (F, Fortune 500) and 3M (MMM, Fortune 500) are both expected to report results before the start of trading. Reports are also due on durable goods orders and weekly jobless claims.

State of the Union: In his address to the nation later Wednesday, President Obama is expected to talk about how the government plans to temper the growing deficit over the next decade, even as it continues to promote economic growth in the aftermath of the recent recession.

Obama rattled Wall Street last week when he called for greater restrictions on the biggest financial firms, including limiting the ability of commercial banks to make high-risk trades and stopping them from owning or investing in hedge funds.

He is not expected to directly address that particular proposal, but his rhetoric on the banking system and the economy will be closely watched by Wall Street.

Federal Reserve: The central bank opted to hold the fed funds rate, a key short-term bank lending rate, at a historic low near zero percent, as had been widely expected.

In the closely watched statement, the bankers offered little new guidance, saying the economy has continued to strengthen since December's meeting and that the pace of the slowdown in the labor market is slowing. However, the statement did not provide any insight as to when the Fed plans to loosen its accommodative policy -- something investors are very focused on.

One notable surprise was that Kansas City Fed president Thomas M. Hoenig disagreed with the group's decision to state that conditions "are likely to warrant exceptionally low levels of the federal funds rate for an extended period."

Hoenig, a known inflation hawk, thought that activity was picking up at a pace sufficient to change the language to suggest that rates could rise a little sooner.

The phrase "extended period of time" suggests rates will be held steady for at least six months if not more, said James Barnes, vice president and fixed income co-manager at National Penn Investors Trust. Hoenig's dissent indicates he might like to see rates start to move higher in the first half of the year.

However, rates are unlikely to move anytime soon, Barnes said. The combination of low interest rates and the injection of trillions of dollars of stimulus into the system helped fuel the stock market rally last year and take the edge off the worst recession since the Great Depression. The Fed is unlikely to step back just yet, especially when the recovery is still tentative.

"The economic news has in some ways been more positive than anticipated, outside of what we've seen in housing," Barnes said. "But we're still a long ways away from when the Fed is going to be comfortable raising rates or pulling money off the table."

With his term set to expire Sunday, questions remain about whether Fed Chief Ben Bernanke has enough votes in the Senate to force a confirmation vote. Worries that his term might not be renewed contributed to last week's massive stock selloff, in which the Dow, S&P 500 and Nasdaq all lost 5% in three sessions.

Apple: Apple (AAPL, Fortune 500) revealed the new iPad - a 1.5-lb, half-inch wide tablet computer that falls between a smartphone and a laptop.

Apple shares initially dipped as the announcement was underway, but reversed course to end about 1% higher after the lower-than-expected starting price of $499 was announced. Rumors had pegged the price as being closer to $1,000.

Apple shares are down about 1% year-to-date as of Wednesday's close, after spiking 147% in 2009.

Housing: New home sales plunged to a 9-month low, according to a Census Bureau report released Wednesday. Sales fell 7.6% to a seasonally adjusted annual rate of 342,000 in December from a revised rate of 370,000 in November.

Quarterly results: Shares of Caterpillar (CAT, Fortune 500) slid 4% after the heavy-machinery maker issued a 2010 earnings forecast of $2.50 per share, short of the $2.71 per share analysts were expecting, on average. The Dow component said that a global economic recovery only favors some of its business units rather than all.

Caterpillar also reported weaker quarterly earnings that nonetheless topped estimates and weaker revenue that missed expectations.

Fellow Dow component Boeing (BA, Fortune 500) reported a quarterly profit versus a year-ago loss on higher quarterly revenue. Results topped forecasts. However, looking forward, the company forecast 2010 earnings of $3.70 to $4 a share versus forecasts for a profit of $4.26 per share. Nonetheless, Boeing stock rallied 7%.

After the close Tuesday, Yahoo (YHOO, Fortune 500) reported a quarterly profit that reversed a year-ago loss, as the online advertising market showed some signs of life. Results were better than expected. The Internet behemoth also reported weaker quarterly revenue that topped estimates. Shares were little changed Wednesday.

World markets: In overseas trading, Asian and European markets tumbled again on concerns about China's bank lending curbs. Global stocks got hammered Tuesday after Standard & Poor's warned it could cut its debt rating on Japan.

Meanwhile, China implemented some of the bank curbs that had been hinted at last week. China is one of the main drivers of the global economy and any slowdown would have a broad impact.

Commodities and the dollar: The dollar reversed course after the Fed statement, falling versus the euro and gaining against the yen.

COMEX gold for February delivery fell $13.80 to settle at $1,084.50 an ounce. Gold closed at an all-time high of $1,218.30 an ounce last month.

U.S. light crude oil for February delivery fell $1.04 to settle at $73.67 a barrel on the New York Mercantile Exchange.

Bonds: Treasury prices rose, lowering the yield on the 10-year note to 3.60% from 3.62% late Tuesday. Treasury prices and yields move in opposite directions.  

Banks drag on stocks

NEW YORK (CNNMoney.com) -- Stocks struggled Tuesday afternoon as a late-session selloff in the financial sector cut into an earlier rally that had been sparked by Apple's record quarterly results and a stronger reading on consumer confidence.

After the close, Yahoo (YHOO, Fortune 500) reported a quarterly profit, reversing a year-ago loss, as the online advertising market showed some signs of life. The company also reported weaker quarterly revenue that topped estimates. Shares initially slipped after hours before rebounding.

The Dow Jones industrial average (INDU) lost 2 points or less than 0.1%. The S&P 500 index (SPX) shed 4 points, or 0.4%. The Nasdaq composite (COMP) slid 7 points, or 0.3%.

After seesawing through the early morning, stocks turned higher near midday, thanks to gains in financial and consumer shares. But the advance petered out by the end of the session.

Financials led the retreat, with the KBW Bank (BKX) index falling 2.2%.

Stocks mustered slim gains Monday as fears about the bank sector lessened, along with opposition to Federal Reserve Chairman Ben Bernanke serving for a second term.

Investors are still climbing back after last week's battering, in which the Dow, S&P and Nasdaq all plunged 5% in the last three sessions of the week.

Although Apple provided investors with some optimism throughout the session, that wasn't enough to keep stocks higher. The ongoing Fed meeting was also in focus.

Joseph Saluzzi, co-head of equity trading at Themis Trading, said that last week's selloff showed a change in market character. "We've had a lot of little selloffs in the last nine months, but last week was different," he said.

That difference was reflected in the pace of the selling last week and the spike in the VIX - Wall Street's so-called fear gauge - to a six-month high, he said. The VIX has dropped about 17% since late Friday, but the risk of another 5% to 7% correction in the short term remains, he said.

Federal Reserve: The central bank begins its two-day policy setting meeting amid ongoing questions about whether the Fed chairman's term will be renewed.

The central bankers are widely expected to hold interest rates steady at historic lows near zero and to signal that they will continue to do so for the time being. A statement is expected Wednesday at around 2:15 p.m. ET.

However, investors will still scour the statement for hints about when the Fed may start to raise interest rates or withdraw some of the trillions of dollars of stimulus it had put into the economy over the last few years.

The combination of sustained low interest rates and more money in the system played a major role in boosting the stock market last year and stopping the recession from becoming a Depression.

With his term set to expire on Jan. 31, questions remain about whether Fed Chairman Bernanke has enough votes in the Senate to force a confirmation vote. However, those worries have lessened this week.

"There's an easing of people's minds this week with respect to Bernanke and that's helping, although some people would still like to get rid of him," said Jack Reutemann, founder of Research Financial Strategies.

Apple: After the close of trading Monday, Apple (AAPL, Fortune 500) reported quarterly earnings and revenue that topped estimates, thanks to strong sales of iPhones and Macintosh computers. Quarterly revenue surged to a record $15.7 billion. The company is on track to debut its greatly-anticipated new tablet computer on Wednesday.

Corporate results: Dow component Travelers Companies (TRV, Fortune 500), the U.S. property-casualty insurer, reported higher quarterly earnings and revenue that beat estimates thanks to strong gains in underwriting and investment. Shares rose 3%.

Chemical maker DuPont (DD, Fortune 500) reported a profit versus a year-ago loss and a rise in revenue, thanks to improving market trends and cost cutting. Results topped analysts' estimates.

DuPont also boosted its 2010 earnings forecast due in part to an improving economy. Shares of the Dow component were little changed.

Consumer products maker Johnson & Johnson (JNJ, Fortune 500) reported weaker earnings and stronger revenue versus a year ago, both of which topped forecasts.

The company also forecast a full-year 2010 profit of $4.85 to $4.95 per share versus analysts' expectations for a profit of $4.94 per share, sending the stock a little lower in afternoon trading.

Verizon Communications (VZ, Fortune 500) reported a fourth-quarter loss due to layoff charges. Excluding items, the profit was in line with estimates. The telecom also reported higher revenue that missed estimates. Verizon said it added 2.2 million mobile subscribers, topping forecasts for adds of 1.5 million.

Looking forward, the company said it is seeing a slower-than-expected economic recovery and that it expects to cut 6% of its workforce this year, or around 13,000 jobs.

Confidence: The Consumer Confidence index, from the Conference Board, rose to 55.9 in January from 53.6 in the previous month, versus forecasts for a reading of 53.5.

Housing: A key report that showed prices fell for the first time in seven months. The S&P/Case-Shiller 20-city home price index fell 0.2% in November from October and fell 5.3% from a year ago, in a bigger-than-expected drop.

World markets: Global stocks were under pressure after Standard & Poor's warned it could cut its debt rating on Japan and China implemented some of the bank curbs that had been hinted at last week.

China is one of the big drivers of the global economy and any indication that it is slowing down has an impact on world markets.

Asian markets ended lower, with the Japanese Nikkei tumbling 1.8%. European markets shook off earlier gains to stand flat to higher.

Commodities and the dollar: The dollar gained versus the euro and fell against the yen.

COMEX gold for February delivery rose $2.60 to settle at $1,098.30 an ounce. Gold closed at an all-time high of $1,218.30 an ounce last month.

U.S. light crude oil for February delivery fell 55 cents to settle at $74.71 a barrel on the New York Mercantile Exchange.

Bonds: Treasury prices rose, lowering the yield on the 10-year note to 3.60% from 3.61% late Monday. Treasury prices and yields move in opposite directions.

Market breadth was negative. On the New York Stock Exchange, losers beat winners three to two on volume of 880 million shares. On the Nasdaq, decliners topped advancers by eight to five on volume of 1.68 billion shares. 

Stocks try to recharge

STI down 2% at midday

Wall Street's worst day in months

NEW YORK (CNNMoney.com) -- Stocks tumbled Thursday after the Obama administration announced a proposal to increase regulation of the nation's biggest financial firms, including limiting the size and scope of their trading operations.

The Dow Jones industrial average (INDU) fell 213 points, or 2%. The S&P 500 index (SPX) slid 21 points, or 1.9%. The Nasdaq composite (COMP) lost 25 points, or 1.1%. The three gauges saw the biggest one-day point declines since late October.

Stocks had fallen through the morning as lingering worries about China's lending practices hit commodities and the broader market. Reports showing a rise in jobless claims and a drop in manufacturing activity added to the pressure, overshadowing Goldman Sachs' better-than-expected profit report.

But declines accelerated as investors geared up for and then dissected the White House's afternoon announcement.

"China is still lingering today and then the Obama announcement comes out and that's when you saw the selling really pick up," said Steven Goldman, market strategist at Weeden & Co.

Obama called for greater government regulation of the nation's biggest financial institutions, including limiting commercial banks ability to make high-risk trades and stopping them from owning or investing in hedge funds.

This would separate commercial and investment banks, a throwback to a Depression-era law that was basically thrown out a decade ago.

Big banks such as JPMorgan Chase (JPM, Fortune 500), Goldman Sachs (GS, Fortune 500) and Bank of America (BAC, Fortune 500) would be impacted in particular.

The plan was in tune with the proposal of former Fed president and current economic advisor Paul Volcker, who has called for greater restrictions on institutions in the wake of the financial crisis.

"On one hand, you want banks to lend more to help stimulate the economy," Goldman said. "But if this means banks can't trade and are going to make less profit and therefore lend less, that's just more uncertainty."

After the close, American Express (AXP, Fortune 500) reported higher earnings that beat forecasts on flat revenue that also beat estimates. Shares of the financial services firm gained 2% in extended hours trading.

Also after the close, Google (GOOG, Fortune 500) reported a big jump in revenue that topped estimates thanks to a rebound in the advertising market. Shares lost 4% in a "sell the news" reaction.

General Electric (GE, Fortune 500) and McDonald's (MCD, Fortune 500) are due to report Friday.

Declines were broad based, with 28 of 30 Dow stocks sliding, led by IBM (IBM, Fortune 500), Exxon Mobil (XOM, Fortune 500), Chevron (CVX, Fortune 500), Caterpillar (CAT, Fortune 500), Coca-Cola (KO, Fortune 500) and the bank stocks.

Stocks were also vulnerable after the three major indexes ended at more than 15-month highs on Monday.

Results: Goldman Sachs said it earned $8.20 a share in the fourth quarter, trouncing forecasts for a profit of $5.20 per share, thanks to strong gains in its investment unit. Goldman also reported full-year 2009 revenue that doubled from a year ago.

The company also attempted to address criticism of its pay packages one year after accepting government money at the height of the financial crisis. Goldman paid its employees $16.2 billion in salaries and bonuses last year, up almost 50% from 2008, but still less than what had been expected.

Goldman shares fell 4%. Other big bank shares fell, but some of the regional banks were up, keeping the overall sector near unchanged. Fifth Third Bancorp (FITB, Fortune 500), Keycorp (KEY, Fortune 500) and Regions Financial (RF, Fortune 500) all gained.

Starbucks (SBUX, Fortune 500) reported higher quarterly sales and earnings that topped estimates in a report released late Wednesday. The coffee chain's results were driven by growth at stores open a year or more, a retail metric known as same-store sales. Shares gained 2%.

Also late Wednesday, eBay (EBAY, Fortune 500) reported higher quarterly sales and earnings that topped estimates. The Internet retailer also boosted its 2010 earnings forecast.

Economic news: The number of Americans filing new claims for unemployment rose to 482,000 from 446,000 in the prior week. Economists surveyed by Briefing.com thought claims would fall to 440,000.

Continuing claims, a measure of Americans who have been receiving benefits for a week or more, fell to 4,599,000 from 4,617,000 in the previous week. Economists expected 4,598,000 claims, on average.

The Philadelphia Fed, a regional reading on manufacturing, fell to 15.2 in January from 22.5 in December versus forecasts for a drop to 18.

A third report showed that the index of leading economic indicators rose 1.1% in December after rising 1% in the previous month. Economists surveyed by Briefing.com thought it would rise 0.7%.

World markets: Asian markets ended lower, with the exception of the Japanese Nikkei. European markets ended lower.

Commodities and the dollar: The dollar fell versus the euro and the yen, reversing morning gains following Obama's speech.

Commodities were also under pressure because of China's curbs, with China being a big buyer of commodities. Reports Wednesday said China has asked banks to slow the pace of lending this year in an attempt to get ahead of inflation.

COMEX gold for February delivery fell $9.40 to settle at $1,103.20 an ounce. Gold closed at an all-time high of $1,218.30 an ounce last month.

U.S. light crude oil for February delivery slipped $1.66 to settle at $76.08 a barrel on the New York Mercantile Exchange.

Bonds: Treasury prices rallied, lowering the yield on the 10-year note to 3.59% from 3.65% late Wednesday. Treasury prices and yields move in opposite directions.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by over three to one on volume of 1.5 billion shares. On the Nasdaq, decliners topped advancers by three to one on volume of 2.91 billion shares. 

Flat open seen for stocks

NEW YORK (CNNMoney.com) -- U.S. stocks were set for a flat open Thursday, as investors continued to worry about China and awaited results from Wall Street giant Goldman Sachs.

Dow Jones industrial average, S&P 500 and Nasdaq-100 futures were narrowly mixed.

Futures measure current index values against their perceived future performance and offer an indication of how markets may open when trading begins.

Stocks on Wall Street slumped Wednesday, knocked back by concerns about China's efforts to tighten bank lending. The major gauges all lost at least 1%.

Mark Luschini, chief investment strategist for Janney Montgomery Scott, said futures were being dragged down partly by "spillover" from Wednesday's declines, and partly because of concerns over China, a global market driver and a major consumer of commodities.

"China is looking to put various curbs on bank lending activities, over concerns that perhaps their economy is getting a bit overheated," he said.

Investors are taking a "wait-and-see approach" ahead of the quarterly report from Goldman Sachs and the weekly jobless claims report, he said.

Earnings: Investors will look to financial results from Goldman Sachs (GS, Fortune 500), which is due to post its earnings before U.S. markets open.

The finance company is expected to report fourth-quarter earnings of $5.20 per share, according to a consensus of analysts from Thomson Reuters.

Luschini said that Goldman is not dependent upon consumer weakness, unlike JPMorgan Chase (JPM, Fortune 500) and Citigroup (C, Fortune 500), which both have credit card portfolios.

After U.S. markets closed Wednesday, Starbucks (SBUX, Fortune 500) posted upbeat results that topped Wall Street's estimates.

Economy: A weekly report on jobless claims comes out at 8:30 a.m. ET.

Initial jobless claims are expected to have totaled 440,000 in the week ended Jan. 16, according to a consensus of economists from Briefing.com. This would be a slight decrease from 444,000 the prior week.

The Philadelphia Fed, a reading on regional manufacturing, is due out at 10 a.m. ET, as is a report on leading economic indicators.

World markets: Stocks in Asia finished mixed. Shares in Hong Kong pulled back but Japan's Nikkei added 1%. Stocks in Europe mostly rose in midday trading.

Oil and gold: The price of oil was practically unchanged, notching up 10 cents to $77.84 per barrel. The price of gold dropped $8.10 per ounce to $1,104.50.

Cash and bonds: The dollar rose against major international currencies, including the euro, the yen and the British pound. The price of the 10-year note rose, pushing the yield down to 3.66%.