An early rally fizzled Friday, threatening to snap the market's winning streak.
The Dow Jones Industrial Average turned lower as the weakness spread beyond techs and retail and into the banking sector.
American Express was the biggest percentage decliner on the Dow.
If the market pulls off a gain today it would be the fourth straight session of gains, following a a strong rally on Thursdaythat brought the Dow's three-day gain to more than 600 points, or 9.5 percent.
Everything from better-than-expected retail sales to Bernie Madoff's incarceration were cited for the recent runup but Art Cashin, director of floor operations at UBS, said there's some buzz that it was anticipation of "some adjustment to mark-to-market rules."
Vince Farrell of Scotsman Capital Management flagged this quote from FDIC Chairman Sheila Barr:
"We think it is absolutely true that the assets (meaning the impaired assets on bank balance sheets) are worth more than the current market conditions assigned to them and so that, yes, over time, there will be significant profits from these," FDIC Chairman Shelia Barr said in an interview with American Public Media.
"Ms. Bair's assessment would appear to substantiate the position that Vince and I share with Steve Forbes and lots of others that many, if not most bank assets have been marked down way, way too low. That's the fault of mark to market," Cashin wrote in his morning note to clients.
Of course the question on everyone's mind is: Will it last?
"This was the first part of the move. This was the easy part of the move, where shorts get squeezed, bottom feeders come in and it puts the stock market back on the map," Scott Redler, chief strategic officer for T3live.com, said on CNBC this morning. "What we now need to see is some nice price consolidation in these higher levels, make investors and traders think they're missing something and then I think this rally can continue higher over the next few weeks."
In economic news, consumer sentiment improved slightly in March as confidence in the government's economic action plan improved. In January, the trade deficit hit a six-year lowas import prices dropped 0.2 percent and export prices unexpectedly slipped 0.1 percent.
Citigroup shares jumped at the open after Chairman Richard Parsons said Thursday that the bank doesn't need any more capital injections from the government and expressed confidence that Citi would remain in private hands.
The bank is preparing to nominate some four new members to its board, including former U.S. Bancorp chief executive Jerry Grundhofer, as soon as next week, according to the Wall Street Journal.
Meanwhile, Bank of America also gained after CEO Ken Lewis said it would be a "nightmare" for U.S. banks to be nationalized, wiping out shareholders and perhaps bondholders, and further damaging an economy that might begin to recover as soon as this year.
He added that he was confident that Bank of America, the largest US bank, will pass the government's pending "stress test,"and would not need more government capital.
General Motors shares rose sharply, leading the Dow, afer the battered automaker said it would not need government cash injections for now. The stock jumped 17 percent on Thursday.
But the board was peppered with declines, notably in the tech and retail sectors.
Wal-Mart shares slipped, edging lower after Goldman Sachs removed the company from its "conviction buy" list.
In other news, Warren Buffett's Berkshire Hathaway was stripped of its 'AAA' credit rating by Fitch, barely hours after S&P cut General Electric's top-tier rating, as the global financial crisis pummels America's corporate titans.
The legendary investor said the odds favor a US acquisition by Berkshire rather than a foreign one, because there are more opportunities opening up in the US and fewer competing buyers bidding up prices.
However, he did not completely rule out foreign acquisitions.
Investors actually reacted positively to the GE cut as some feared the reduction could have been worse. GE shares advanced after gaining 12.7 percent on Thursday.
Asian stocks rallied on hopes the financials were slowly crawling out of the pit and markets in Europe were also higher.