Stocks Rise as TARP Repayers Are Named
Stocks opened higher Tuesday after Texas Instruments raised its outlook and the banks set to repay TARP loans were named.
Tech stocks outperformed the broader market after Texas Instruments raised its earnings and revenue targets for the second quarter, signaling improving demand in the chip market. Shares jumped more than 5 percent.
Ten banks are set to repay capital they received through the Troubled Asset Relief Program, including Goldman Sachs and JPMorgan Chase.
The companies are expected to give back some $50 billion, about twice what the government expected. Still, the ten stocks were mixed. The best performer was Capital One , which saw its shares jump about 4 percent.
Banks continue to hold large amounts of toxic assets and the stress tests should be repeated if unemployment worsens, a Congressional Oversight Panel report showed.
Also in the banking sector, all ten of the largest U.S. banks under order to raise additional capital have submitted their plans, the Federal Reserve said.
On the economic front, wholesale inventories shrunk by 1.4 percent in April, more than the 1.2-percent decline expected.
European shares were higher, with energy stocks boosted by buoyant oil prices, but Asian stocks were mixed, with investors worried the recovery rally was overdone.
Market participants are awaiting a $35 billion auction of three-year U.S. Treasury notes later in the day and auctions of 10-year and 30-year U.S. Treasurys later in the week to get a better picture of rate expectations.
Italian automaker Fiat will not walk away from its deal to buy bankrupt Chrysler, a spokesman said after the U.S. Supreme Court delay threw the deal into doubt. The deadline for the deal is June 15.
Late Monday, Citigroup said it expected to begin its much-delayed $58 billion stock swap later this week as part of a plan that could leave the government with a 34 percent stake.
Citi shares skidded in morning trading, as did shares of Bank of America .
And a House Financial Services subcommittee holds a hearing on OTC derivatives and swaps.
Treasury Secretary Timothy Geithner testifies before a Senate Appropriations committee on the Treasury's budget request at 10 am New York time.
Elsewhere, steel industry stocks could be under pressure.
Standard & Poor's cut its credit rating on ArcelorMittal, the world's largest steelmaker, and issued a negative outlook. S&P said generally dour prospects for the industry would weigh especially on ArcelorMittal, sending the company's stock down 2 percent premarket. Conversely, shares of US Steel gained 3 percent.
Economic data out of the U.S. includes wholesale trade data for April at 10 am New York time and the NFIB small business survey out at 7:30 am.
Oil prices rose ahead of afternoon inventory data from the America Petroleum Institute as analysts polled by Reuters expect a decline in weekly crude supplies.