Dow Ends Lower, Nasdaq Flat

The Dow and S&P 500 fell on Tuesday as bank stocks slid on a broker warning about more losses at Citigroup and the Federal Reserve chairman said mortgage delinquencies and foreclosures were likely to rise. But the Nasdaq ended little changed after Cisco Systems Inc's chief executive said he expects the economy's problems to be short-lived, easing concerns about the impact of slower growth on business spending. The day got off to a rough start after Merrill Lynch & Co forecast a $15 billion loss at Citigroup Inc, sparking a 4.3 per cent slide in its shares and pushing the S&P financial index down to a fourth straight day of losses. The Dow Jones industrial average fell 45.10 points, or 0.37 per cent, to 12,213.80. The Standard & Poor's 500 Index dropped 4.59 points, or 0.34 per cent, to 1,326.75. But the Nasdaq Composite Index inched up 1.68 points, or 0.07 per cent, to 2,260.28.

After spending most of the day in the red following a reduced profit margin forecast from Intel Corp, the Nasdaq edged higher as reassuring comments from networking equipment maker Cisco eased worries about tech spending.

Even so, concerns about the financial sector's outlook dominated, causing shares of Citigroup, the largest U.S. bank when ranked by assets, to finish down 4.3 per cent at $22.10 on the New York Stock Exchange. CNBC television reported that a deal to rescue ailing bond insurer Ambac Financial Group was near, pushing the company's shares up nearly 8 per cent and helping the broader market cut losses during the session's last hour.

In a speech in Florida, Federal Reserve Chairman Ben Bernanke said more declines in house prices could be expected. The housing slump has had a damping effect on consumer confidence and spending, which is a strong element of economic growth. Fed Vice Chairman Donald Kohn told a hearing of the Senate Banking Committee that U.S. banks should consider slashing dividends to ease the strain on balance sheets laden with bad debts. Also hurting financials was Wachovia's reduction of its earnings estimates on four U.S. investment banks, including Bear Stearns Co Inc, saying the first quarter for investment banks would be one of the worst in several years.

Source: Sify