Stocks declined Tuesday after dismal corporate news about Intel and Citigroup.
The Dow Jones Industrial Average dropped about 100 points, or nearly 1 percent, in the first five minutes of trading, before pulling back to a more modest decline. The Nasdaq and S&P 500 index also fell.
Still, some analysts saw cause for optimism -- and in the very sectors that were under water Tuesday.
"By the summer, we'll be okay, so it's too late to sell," Mike Holland, chairman of Holland & Co. told CNBC Tuesday. ""Blood in the streets is beginning and it's time to be looking at some things to buy." One of Holland's picks is CNBC parent General Electric .
"I would think that you should absolutely be making a shopping list," added Rich Berg, CEO of Performance Trust Capital Partners. Berg sees regional banks that had nothing to do with the current financial problems as some of the best values.
David Goerz, chief investment officer of Highmark Capital, says that he likes industrials and techs.
Just before the market opened, Federal Reserve Chairman Ben Bernanke called for banks to take additional measures to prevent more homeowners from falling into foreclosure. "This situation calls for a vigorous response," Bernanke said in a speech to a banking group in Florida, encouraging banks to do more to combat the problem.
One of the suggestions Bernanke made was for mortgage and other financial companies to reduce the amount of the loan to provide relief to a struggling owner. "Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding deliquency and foreclosure," Bernanke said. (Read the text of the speech.)
Oil prices hovered around $102 after hitting an intraday high of $103.95 on Monday as demand for commodities remains high. OPEC is expected to keep output unchanged.
Financials in Focus
Financials were hammered following news that Citigroup's job cuts could reach 30,000or more over the next year and a half due to more writedowns and comments from Dubai's investment agency that the company, which has already raised $30 billion, will need additional capital.
Several financial stocks, including Citigroup, hit notable lows and the S&P Financial index broke through its January low. Citi, the Dow's top decliner, hit a nine-year low. Lehman Brothers and Freddie Mac also reached new intraday lows.
Merill Lynch cut its earnings forecast for Citigroup, saying it now expects a first-quarter loss of $1.66 a share, compared with its earlier view of 55 cents a share, amid $15 billion in writedowns related to subprime mortgages, theflyonthewall.com reported.
Also, the Wall Street Journal reported that Citi and Wachovia were defendants in separate lawsuits filed in US Federal Court in New York by a small fund. Citi shares were down about 2.3 percent in premarket trading.
And the municipal bond insurance industry is likely to get a heavy blow, after California, the country's largest issuer of municipal bonds, decided to stop using municipal-bond insurance, saying they bring no value to taxpayers in the current market conditions.
Chips were crunched after Intel , the world's largest chip maker, lowered its gross margin forecast for the current quarter to 54 percent from 56 percent, citing falling prices of flash-memory chips used in portable electronic devices such as digital cameras and MP3 players.
"The consumer side will stay under pressure" in the technology sector, Stephen Pope, chief market strategist at Cantor Fitzgerald, told "Worldwide Exchange."
Jefferies and Banc of America cut their price targets on Intel to $30 and $21 respectively, theflyonthewall.com reported, but kept their ratings on the the stock. Jefferies has a "buy" rating and Banc of America has a "neutral" rating on Intel.
Intel shares skidded, as did shares of rival AMD. Shares of companies such as Sandisk and Micron Technology, which focus more specifically on that type of chip, were hit even harder.
The Philadelphia Stock Exchange semiconductor index dropped about 1 percent.
Shares of Applied Materials , however, jumped after the chip-equipment maker struck a $1.9 billion deal with a private buyer outside the U.S. The stock is up 10 percent year to date.
Elsewhere in tech, investors are looking to Apple, which hosts its shareholders' meeting this afternoon. A day earlier, two brokerages lowered their price targets on the stock, citing a slowdown in sales of iPods and iPhones as consumers cut back. Apple shares have tumbled about 40 percent in 2008 alone.
Staplesreported its profit was flatas international sales helped offset a slowdown in North American stores. Earnings were $333 million, or 47 cents a share, in line with expectations. The office-equipment retailer also increased its dividend by 14 percent to 33 cents per share.
Barnes & Noble tumbled about 8 percent after the bookseller said its earnings will be below expectations for the entire year.
TUESDAY: Apple shareholder meeting; Ohio, Rhode Island, Texas and Vermont primaries
WEDNESDAY: Factory orders; ISM services index; Fed beige book; Pfizer and Intel analyst meetings
THURSDAY: Weekly jobless claims; Retailers' Feb. sales reports; ECB and BOE rate decisions; Disney shareholder meeting
FRIDAY: February jobs report
Send comments to Cindy.Perman@nbcuni.com.