Major U.S. stock indexes staged a partial rebound from Monday's sell-off, trading higher Tuesday thanks to confidence-boosting capital infusion in Citigroup (C) by an Abu Dhabi investment fund, providing much-needed cash to help offset mortgage and other losses at the financial giant.
On Tuesday, the Dow Jones industrial average was trading 63.16 points, or 0.50%, higher at 12,806.60. The broader S&P 500 index was up 4.87 points, or 0.35%, at 1,412.09. The tech-heavy Nasdaq composite index gained 14.15 points, or 0.56%, to trade at 2,555.14.
The Abu Dhabi Investment Authority said it will invest $7.5 billion in Citigroup in exchange for a 4.9% interest in the nation's largest bank. Citigroup said the investment was passive and won't buy the Investment Authority a seat on the bank's board.
Leading the economic news was the Standard & Poor's/Case-Shiller U.S. national home price index, whose 20-city composite fell 0.9% in September from August, after a 0.7% decline in August. The index, which measures prices of single-family homes in the 20 largest metropolitan areas, was down 4.9% from a year ago, while the 1.7% drop between the second and third quarters was the largest quarterly decline in the index's 21-year history.
The Conference Board said that consumer confidence dropped more than expected to 87.3 in November from the 95.2 reading in October. The index had been projected to fall to 92.0. The latest figure is the lowest since the aftermath of Hurricane Katrina in Fall 2005, while the expectation component was the weakest since just before the start of the Iraq War in early 2003.
Meanwhile, the yield on 10-year Treasury notes has dropped sharply to 3.848%, the lowest level since March 2004, from 4.012% on Friday, a clear sign of the growing distress in the credit markets. With the Fed funds rate at 4.5%, some market observers believe it's inevitable that the Federal Reserve will further ease rates at or before its final policy committee meeting of 2007, on Dec. 11, in order to better manage the slowing U.S. economy.
January NYMEX crude oil futures continued to fall on Tuesday, down $2.90 to $94.80 per barrel on further talk that production hikes are likely to result from the OPEC meeting next week. Saudi Arabia is already believed to have raised its output to over 9 million barrels per day, while Iran is also considering an increase and Qatar's oil minister said he sees no need to raise production. A stronger dollar on warnings of a global economic slowdown was also putting pressure on oil prices.
Among stocks in the news Tuesday, Aspenbio Pharma (APPY) said it will pursue the more expedient of two paths to securing regulatory clearance from the U.S. Food and Drug Administration for AppyScore, the first blood-based screening/triage test for human appendicitis.
Bidz.com (BIDZ) said that sales over the Thanksgiving holiday weekend jumped 78% from last year. The online jewelry retailer reaffirmed its fourth-quarter outlook for $56 million to $58 million in revenue and $5.6 million to $6.0 million in pre-tax income. Bidz.com expects to earn 47 to 51 cents a share on a fully-taxed GAAP basis in fiscal 2008, but shares fell 22% as the company's guidance came in at the low end of expectations.
Signet Group PLC (SIG) reported a third-quarter profit of $1.6 million, vs. $5.2 million in the prior-year period, despite a 10% increase in sales. The specialty jewelry retailer cited a more challenging retail marketplace in the U.S.
European equity indexes were trading lower on Tuesday. In London, the FTSE 100 index slid 1.12% to 6,111.50. Germany's DAX index was down 0.83% at 7,504.51. In Paris, the CAC 40 dropped 1.07% to 5,399.82.
Asian markets ended mostly lower on Tuesday. In Japan, the Nikkei 225 index climbed 0.58% to 15,222.85. In Hong Kong, the Hang Seng index slipped 1.51% to 27,210.21. The Shanghai composite fell 1.97% to 4,861.11.
Treasury Market
Treasury prices retreated as equities staged a modest comeback on Tuesday. The two-year notes was down 07/32 to 101-04/32 for a yield of 3.00%; 10-year notes fell 22/32 to 102-21/32 for a yield of 3.92%; and the 30-year bond dropped 30/32 to 110-27/32 for a yield of 4.34%.