Stocks ended a yo-yo session lower Tuesday, with the S&P ending a few points below the 700 mark as investors remained on edge.
After several attempts a rally, the Dow Jones Industrial Average ended down 37.27, or 0.6 percent, at 6,726.02 in the choppy wake of Monday's selloff that sent the Dow to a sub-7,000 closefor the first time in 12 years.
The S&P 500 dropped 4.49, or 0.6 percent, to close at 696.33. It was the first time the S&P has closed below 700 since October 1996.
The Nasdaq was the best performer of the three major indexes, shedding less than 2 points to close at 1,321.01 amid strength in techs.
Investors scooped up bargains at the open but then began to cash in their chips as Federal Reserve Chairman Ben Bernanke began to testify before the Senate Budget Committee.
Bernanke said that economic prospects remain uncertain and said more action will be necessaryto jolt the economy out of this rut.
The Federal Reserve and Treasury today launched the TALF, a $200 billion credit infusionaimed at loosening the availability of credit for consumers and small businesses. Officials say it could generate up to $1 trillion in lending.
American Express was the best performer on the Dow, climbing 6.9 percent, amid hopes that the TALF plan will help ease the credit-card company's pain.
General Electric was the Dow's biggest percent decliner, falling 7.8 percent. The company's move last week cut its dividend has failed to juice the stock and CEO Jeff Immelt acknowledged Tuesday that the company's reputation has been "tarnished." Immelt said the conglomerate, which is also the parent of CNBC, is already identifying parts of its troubled finance arm that it can exit in the next few years.
Treasury Secretary Tim Geithner was also on Capitol Hill, vigorously defending tax hikesin the administration's $3.6 trillion budget during testimony before a House panel.
Stocks actually rose while Geithner was speaking, prompting some speculation that maybe the "Geithner Curse" is over. It seems that whenever Geithner, and before him Hank Paulson, speaks, the market goes down.
President Obama gave a little confidence boost to the market.
"[B]uying stocks is a potentially good dealif you've got a long-term perspective on it," Obama said after meeting with British Prime Minister Gordon Brown.
In the day's only major economic data point, pending-home sales dropped 7.7 percentto the lowest level on record, the National Association of Realtors reported.
And, with job losses piling up and confidence tanking, the NAR expects such sales to continue to slide.
Home prices are already down 20 percent from the market peak in 2007, and aren't expected to bottom out until mid-year — at the earliest — stirring baby boomer worries about retirement.
Bank stocks led the rally out of the gate but by the closing bell, just Citigroup , whose shares are heading into penny range after the government sharply increased its stake in the banking titan, Bank of America and a handful of others were higher.
Bank of America CEO Ken Lewis expressed regret over his request for $20 billion of government aid to the FT newspaper. He said asking for such a large sum to help absorb Merrill Lynch’s losses was a "tactical mistake."
From 'Fast Money':
Shares of JPMorgan Chase lost 0.7 percent after an earlier gain spurred by a report that the company made $5 billion last year by trading over-the-counter fixed-income derivatives.
Wells Fargo shed 1.6 percent. PNC Financial lost 5 percent and State Street declined 2 percent.
Meanwhile, the head of the Federal Deposit Insurance Corp Chairman Sheila Bair played down fears of prolonged bank nationalizations; by saying the government was unlikely to operate any large financial institutions for a long period.
Investors kept a weary eye on the banking sector in Europe as shares of HSBCtook another hammering after the bank launched its deeply discounted rights issue Monday.
AIG shares gained 2.4 percent as this latest bailout of the insurance giant continued to divide opinion. Many market pros say AIG is too big to fail but legendary investor Jim Rogers told CNBC it, together with other sick financial institutions, should be allowed to go bankrupt.
He also, incidentally, told CNBC that he's started buying land and farming.
"If I'm right, agriculture is going to be one of the greatest industries in the next 20 years, 30 years," Rogers said.
Oil prices also staged a rebound after a sharp drop Monday. US light, sweet crude gained $1.50, settling at $41.65 a barrel.
Automaker shares declined after February sales tanked, indicating that consumers aren't willing to make major purchases despite sweet incentives.
General Motors shed 1 percent after the automaker reported a bigger-than-expected 53 percent drop in sales for last month.
Ford lost 3.7 percent after the company reported its sales dropped more than 46 percent.
Trading was active, with 1.9 billion shares changing hands on the New York Stock Exchange, well above last year's daily average of 1.5 billion. Decliners outpaced advancers, 2 to 1.
This Week:
WEDNESDAY: Weekly mortgage applications; ADP, Challenger jobs reports; Madoff hearing at 10 am; ISM services index; Fed's beige book; Earnings from BJ's, Costco and Toll Bros.; UK prime minister addresses joint session of Congress
THURSDAY: Chain-store sales; European rate decisions; weekly jobless claims; factory orders; Senate hearing on AIG
FRIDAY: Jobs report; consumer credit
Send comments to cindy.perman@nbcuni.com.
