Financial stocks held the market underwater Monday and will continue to figure in Tuesday's trading as investors struggle to sort out what the credit mess means for Wall Street and the banking industry.
A batch of earnings are due Tuesday, including Archer-Daniels, Emerson, Tenet Healthcare, Valero, Allergan, Molson Coors, and Chesapeake Energy.
Fed Chairman Ben Bernanke speaks at 1:40 p.m. ET at ACCION Texas Summit on Microfinance in San Antonio, Texas. Traders will watch for headlines but they expect little news and the key event of the week will be Bernanke's testimony Thursday before the congressional Joint Economics Committee. There his comments will be watched carefully and could contain hints as to his view of the economic news since the last FOMC meeting. Former Federal Reserve Chairman Alan Greenspan, meanwhile, speaks in Tokyo Tuesday.
President Bush holds a White House Forum on Trade and Investment with top business leaders. CNBC senior economic correspondent Steve Liesman will report from the event. President Bush also meets with French President Nicolas Sarkozy Tuesday evening.
Some bright spots in Monday's market include tech darling Google, which continues to dance to its own tune and is zipping up and away from the $700 mark as quickly as it hit it. Google unveiled a new phone product, and its stock gained 2%.
Its hard to keep those utilities stocks down. The defensive utilities continue to attract buyers, rising 1.16%, the best performers of the day. Some winners were also found in the health care sector -- Wyeth, Amgen, Allergan for instance.
The Dow closed at 14,543, or 51 points lower, after dipping down as much as 148 points. The NASDAQ was off 15, or 0.5% to 2795, and the S&P 500 slid 7 to 1502.
"The one interesting thing is that the market had every excuse to get slammed, really slammed, and it didn't do it. You may take a little solace away form that if you're looking for the silver lining in the big dark cloud," said John O'Donoghue of Cowen.
O'Donoghue pointed to some of the winners were also in the biotech sector today. "It's more sort of you pick your spots and you figure out where you want to be. What I'm looking at is the winners are going to keep being the winners into the year end and then you reassess," he said.
Investors responded to the news from Citigroup on Monday, by pounding the rest of the banking sector and broker stocks. Citigroup on Sunday said CEO Chuck Prince was leaving and that he would be replaced on an interim basis by former U.S. Treasury Secretary Robert Rubin who will act as chairman, and Win Bischoff, head of Citigroup's European operations, who will be interim CEO.
Citigroup also revealed it would write off another $8 to $11 billion in subprime-related securities. That write down has Wall Street spinning with rumors of what other firms might have more writedowns of their own. Once more, Goldman Sachs was in the rumor mill and it denied rumors it was hiding billions in losses. That speculation weighed on the market and the financial stocks for part of the day. The S&P financial sector ended the day 1.4% lower.
J.P. Morgan analyst Christopher Flanagan, meanwhile, said on a conference call with clients Monday that write downs of losses from sub prime related securities could total $200 billion, and that financial institutions could be sitting on at least $60 billion in losses that are as yet undisclosed. In a Reuters report, Flanagan was quoted as saying "banks, brokers, mortgage and monoline insurers will bear the brunt of this loss recognition." No wonder there's a lot of fear out there.