Stocks opened lower Wednesday as investors looked for further guidance from Treasury Secretary Timothy Geithner and the next batch of corporate earnings.
Today's retreat followed Tuesday's rally as investors welcomed comments from Geithner that most banks are well capitalized.
Credit worries continued to trouble the market after Capital One reported earnings that were worse than expected and said it was feeling the pressure of defaults.
Capital One shares fell more than 3 percent while Dow component American Express lost more than 1 percent.
Wells Fargo gained more than 1 percent after the bank reported record earnings of $3.05 billion.
Morgan Stanley skidded more than 5 percent as the investment bank said credit troubles hampered earnings. The company's loss of 57 cents a share badly missed expectations of an 8-cent loss, and it cut its dividend to 5 cents a share.
In other earnings news, Continental and Dow component Boeing posted earnings that, while weak, beat expectations.
Fellow Dow component AT&T reported earnings of 53 cents a share, beating Wall Street expectations by a nickel.
Altria reported earnings of 39 cents per share that were about in line with expectations.
“The proof is in the pudding and that’s earnings … It’s pretty easy for these companies to look good because all the analysts are expecting the worst,” Jared Levy, senior derivatives strategist from Peak 6 Investments, told CNBC.
Automakers rallied after the Obama administration said Tuesday it will make $5 billion available to General Motors and another $500 million for privately held Chrysler to help the companies get back on their feet.
Chrysler may be able to reduce its debts by offloading shares to some of its lenders. The troubled automaker’s first-lien lenders have offered to write off about 35 percent of the $7 billion owed in exchange for a stake in the company.
Shares of GM jumped about 5 percent, while Ford gained more than 10 percent.
European shares got a boost from bank stocks in early trading, but the Asian market ended mixed as investors remained cautious.
WEDNESDAY: Weekly crude inventories; Earnings from AT&T, Boeing, McDonald's, Morgan Stanley, Wells Fargo, Altria, Ingersoll-Rand, Kimberly-Clark, Apple, eBay, Qualcomm and Yum! Brands
THURSDAY: Weekly jobless claims; existing-home sales; Earnings from Conoco-Phillips, GlaxoSmithKline, Pepsi, UPS, Fifth Third, Marriott, PNC Financial, SunTrust, Union Pacific, US Air, Microsoft, Amazon, AmEx and Burlington Northern
FRIDAY: G-7 meeting in Washington; durable-goods orders; new-home sales; Earnings from 3M,Honeywell, Schlumberger and Xerox
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