U.S. Stocks Give Back Opening Gains And More
NEW YORK (MarketWatch) -- U.S. stocks on Wednesday struggled and failed to extend the market's best day in nearly five years, after regulators eased capital requirements on Fannie Mae and Freddie Mac and Morgan Stanley offered better-than-forecast results.
"Even though the stock market rebounded Tuesday, I'm not sure it's bottomed out yet -- the best indicator of recovery is when the portfolio of financial services stocks rebounds," said Narayanan Jayaraman, a finance professor at the Georgia Institute of Technology College of Management.
Up more than 60 points earlier on, the Dow Jones Industrial Average more recently fell 63.75 points to 12,328.91, with half of its 30 components trading lower.
The S&P 500 declined 3.73 points to 1,327.01, while the Nasdaq Composite shed 13.18 points to 2,255.08.
"The performance of Visa's IPO [Wednesday] will also reveal a lot about investor sentiment regarding the financial services industry," said Jayaraman.
Shares of Visa Inc. soared nearly 30% higher in their trading debut, as the credit-card giant lays claim to the largest initial public offering of stock in U.S. history.
Ahead of the opening bell, the Office of Federal Housing Enterprise Oversight said it would reduce -- but not eliminate -- the excess-capital requirement, giving Fannie Mae and Freddie Mac more flexibility to buy and securitize loans.
Fannie shares were recently up 9.3% while Freddie jumped nearly 7.5%.
Shares of Morgan Stanley , rallied 6.5% after the investment bank reported a smaller-than-forecast 42% profit fall.
Exchange-traded funds tracking financial stocks were among the most active in the initial going, with the SPDR S&P 500 ETF recently off 0.2%.
Nokia Corp. fell 7% after Sony Ericsson, the non-listed joint venture of Sweden's Ericsson and Sony Corp. warned lower-than-anticipated sales would dent its first-quarter numbers.
Ericsson shares were down 9.9%.
Other active issues included U.K.-based mining operator Rio Tinto Plc , off 17%
Elsewhere, Apple Inc. fell 0.7%. The Financial Times reported that Apple is considering a plan to give customers free access to iTunes music in exchange for paying a premium for iPods and iPhones.
And, Adobe Systems climbed 9.1% after forecasting second-quarter earnings above Wall Street estimates.
Overseas, Asia markets put in a strong performance, with a 2.5% rise for the Nikkei 225 in Tokyo.
Europe markets weren't so strong, with the FTSE 100 slipping 0.7%, as market jitters briefly sent shares of British lender HBOS 17% lower. The lender denied it had liquidity problems and recovered much of its losses.
On Tuesday, the Dow industrials rose 420 points, the S&P 500 added 54 points and the Nasdaq Composite rose 91 points after Lehman Brothers Holdings Inc. and Goldman Sachs Group Inc. offered relief on earnings and the Federal Reserve cut interest rates by three-quarters of a percentage point.
By Kate Gibson