Stocks retreated Tuesday after getting a boost in morning trading from the sharpest jump in pending-home sales in 7 1/2 years.
Financials were the main culprit, providing the biggest drag on the Dow Jones Industrial Average. Earlier, the Dow briefly turned positive for the year.
This came after the major indexes kicked off June with a 2-percent rally Monday amid signs of strength from China’s manufacturing sector and relief that General Motors finally entered bankruptcy protection. That came on the heels of May's 4.1-percent gain.
In Tuesday's economic news, pending sales of previously owned U.S. homes shot up 6.7 percentin April, the National Association of Realtors reported. It was the biggest jump since October 2001 and was well above the 0.5-percent expected.
Bank stocks opened mostly lower after a slew of news out of the sector.
First, Treasury Secretary Timothy Geithner told CNBC that "substantial" TARP repayments could come soon.
Then, a handful of financials, including JPMorgan Chase, American Express and SunTrust Banks ,announced plans toraise capital via stock offerings in order to pay back government money. Goldman Sachs also looked to improve its balance sheet by selling its Industrial & Commercial Bank of China stake, sources told Dow Jones.
The moves will be dilutive to shares of those companies and were weighing on futures in the early going.
Morgan Stanley announced plans for a $2.2 billion equity offering.
US-traded shares of British bank Barclays tumbled following news that Abu Dhabi sold an 11 percent stake in the company. The sale stemmed from an investment the government made to get Barclays through the financial crisis.
The fallout from General Motors’ bankruptcy continued as the automaker said it would ask a federal judge to clear the proposed sale of some of its strongest assets within 30 days.
As GM entered bankruptcy proceedings, Chrysler accelerated toward completion: A judge cleared Chrysler’s asset sale to Fiat and will now be effective at noon on Friday.
May auto sales will start to trickle out later in the morning.
Ford continued to benefit from the fallout in the auto sector, with stock continuing to rise after gaining about 25 percent in the past few weeks.
On the economic front, May's same-store sales, due out Thursday, are expected to show declines, despite Memorial Day sales, warmer weather and discounting.
Dallas Federal Reserve President Richard Fisher will speak on the US and global economy at Lubbock, Texas at 1:20 pm.
TUESDAY: Auto sales; earnings from Hovnanian after the bell
WEDNESDAY: Weekly mortgage applications; ADP employment report; ISM services index; factory orders; weekly crude inventories; Earnings from Toll Bros.
THURSDAY: NY Fed Pres. Dudley speaks; Chain-store sales; ECB, BOE rate decisions; weekly jobless claims; Earnings from Ciena
FRIDAY: May jobs report; consumer credit
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