Stocks opened higher following two reports that showed the pace of layoffs is beginning to slow but soon turned mixed as investors pulled the reins on the rally.
Outplacement firm Challenger, Gray & Christmas said planned layoffs in April fellto 132,590, while ADP said private employment decreased by 491,000 in April. Both were better than market expectations and provided further evidence that the economic decline was beginning to ebb.
"[T]he dynamic is shifting from expecting Armageddon to expecting an improving world," Tony Crescenzi of Miller Tabak wrote in a note to clients.
ADP's calculation of job losses used to be widely disparate with the government's payrolls number but the company changed its methodology in January, using jobless-claims data, and since then has been a better indicator of the government number.
The Labor Department's April jobs number is due out on Friday. Economists expect it to show that 600,000 jobs were shaved from nonfarm payrolls and that the unemployment rate jumped to 8.9 percent from March's 8.5 percent, according to Reuters.
But the market remained jittery about the future of banks following a report that showed Bank of America needs around $34 billion in fresh capital.
Citigroup may need to raise between $5 billion and $10 billion, the New York Times reported.
Still, banks were sharply higher, with Bank of America, Citigroup and Wells Fargo all up more than 10 percent. JPMorgan gained more than 4 percent.
Meanwhile, AIG revealed that it paid out some $454 million in performance-related bonuses for 2008. The previously undisclosed payments come on the back of the insurance giant’s highly contentious retention bonuses, which totaled some $165 million. AIG disclosed the payments when answering questions from a U.S. lawmaker.
General Motors shares tumbled 15 percent after the automaker said it's looking to consolidate its battered shares with a 1-for-100 reverse stock split. That means a GM shareholder with 100 shares would see them grouped together in one.
Walt Disney shares shot up about 10 percent after the entertainment giant reported sharply lower earnings but beat its target.
Shares of Dow Chemical fell after the company announced plans to sell about $1.63 billion in common stock to pay down debt for related to its acquisition of Rohm and Haas.
Still to come: Results are due out after the closing bell from tech bellwether Cisco Systems , videogame maker Electronic Arts and homebuilder Pulte Homes .
Oil prices rose about $1.50, topping $55 a barrel. US inventory data is due to be released at 10:30 am.
Still to Come:
WEDNESDAY: Weekly crude inventories; Earnings from Cisco, News Corp., Prudential after the the bell
THURSDAY: Chain-store sales; Stress-test results; BOE/ECB announcements; Weekly jobless claims; Fed's Bernanke speaks; Consumer credit; Earnings from Unilever, CBS, Nvidia
FRIDAY: Jobs report; wholesale trade; Earnings from Toyota, Berkshire Hathaway
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