Stocks rose Tuesday, even after dismal reports on CPI and housing starts, as investors hope for new direction from the Federal Reserve when the central bank delivers its decision on interest rates today.
Goldman Sachs reported a quarterly loss of $4.97 a share, well off the $3.73-per-share loss expected. Still, its shares rose about 5 percent.
Morgan Stanley reports earnings on Wednesday; analysts expect a loss of 34 cents a share, according to Thomson Financial.
"Expectations are very low for the sector today and that may mean there's some kind of a floor set here," Robert Lutts, chief investment officer at Cabot Money Management in Salem, Mass., told Reuters.
Citigroup shares rose after the bank said it was going to sell its Japan trust banking unit.
Bank of America shares ticked higher, even after Friedman, Billings, Ramsey slapped the stock with an "underperform" rating, saying the bank's equity ratio is too low and that it will have to raise a "substantial" amount of capital, which would dilute existing shareholder value.
On the economic front, housing starts plunged 18.9 percentlast month to a record low annual rate of 625,000 units, as building permits dropped 15.6 percent.
Consumer prices tumbled 1.7 percent in November, the second straight record drop, amid a 17-percent decline in energy costs. Excluding volatile food and energy prices, core CPI was flat.
But the market isn't really worried about inflation data, it's preoccupied with what the Fed's going to say today.
Analysts expect the Fed to slash its target for the federal-funds rate by half a percentage point, which would bring the rate close to zero.
And, while the language in the accompanying statement is always closely watched, it's not about the syntax on economic growth or inflation today — it's about what the Fed will say it plans to do, besides slashing interest rates, about the economic slump.
Market watchers are hoping the Fed signals plans for quantitative easing measures, which essentially involves printing more money, to restore growth and signal an end to the ongoing recession.
Shares of Best Buy shot up about 15 percent after the electronics retailer reported its profit sank in the third quarter and that it planned to offer buyout packages to nearly all employeesin order to cut costs. The retailer also said it would cut capital spending next year by 50 percent.
Further fallout from Bernard Madoff's alleged Ponzi scheme could drag on the markets as the day progresses, and light pre-Christmas volumes could make stock moves highly volatile.
A federal judge has ordered that the fallen titan's firm, Bernard L. Madoff Securities, be liquidated. Meanwhile, as more heartbreaking tales from victims emerge, some are claiming that there was a conflict of interest at the SEC, which should have cracked down on the firm's wrongdoings sooner.
As the scale of the alleged fraud grows, Madoff's close connection with regulatorsis being scrutinized.
The fate of the Big Three auto makers remained uncertain following the failure of a proposed bailout bill in the Senate. The Bush administration may announce plans to use could use part of the $700 billion fund designed to stabilize the financial sector to backstop the car makers.
Shares of General Motors and Ford advanced.
TUESDAY:Fed decision at 2:15pm ET; Earnings after the bell from Adobe
WEDNESDAY: Weekly mortgage applications; Current account; weekly crude inventories; Earnings from Morgan Stanley, Nike
THURSDAY: Weekly jobless claims; Leading indicators; Philly Fed; weekly natural-gas inventories; Fed's Fisher speaks; Earnings from FedEx, Pier 1, Rite Aid, Oracle, Palm, Research In Motion
FRIDAY: Quadruple witching
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