Wall Street rises but ends off highs as Citi sinks

2012-01-18 Font size:T | T

NEW YORK (Reuters) Stocks advanced on Tuesday, pushing the S#39;s steep drop in profit gave investors a reason to unload bank shares.

The financial sector, which has outperformed the broader market so far this year, took a hit on investors disappointment with Citigroup Incs (C.N) earnings.

Citigroups stock slid 8.1 percent to 28.25 after it reported weaker-than-expected earnings.The KBW Banks Index lost 1.4 percent. Through Friday, the KBW Banks Index was up about 10 percent for the year, while the S#39; sell-off splashed cold water on a rally that drove the S#39;s economic growth was better than expected, even though it expanded at the weakest pace in 2-1/2 years.

The better numbers out of China this morning got the market off to a better start, but then there wasnt much follow-through, and you have had what looked to be from JPMorgan and Citigroup not very good-looking earnings, said Eric Kuby, chief investment officer of North Star Investment Management Corp., in Chicago.

Citigroups results followed similarly disappointing earnings on Friday from JPMorgan Chase Poors 500 Index (.SPX) added 4.58 points, or 0.36 percent, to 1,293.67. The Nasdaq Composite Index (.IXIC) gained 17.41 points, or 0.64 percent, to 2,728.08.

After the bell, shares of Yahoo (YHOO.O) shot up 3.6 percent to 15.99 in extended-hours trading following news that Yahoo co-founder Jerry Yang resigned. [ID:nL1E8CHCYY] In regular trading, Yahoos stock slipped 0.3 percent to close at 15.43.

Also after the close, shares of Cree (CREE.O), LED lighting maker, fell 5.5 percent to 22.05 in extended-hours trading after reporting a profit that fell short of analysts estimates and giving a revenue forecast below expectations. Crees stock had closed on Nasdaq at 23.33, up 1.9 percent.

Bank shares also suffered on Friday ahead of the widely expected announcement by Standard #39;s that it was downgrading the credit ratings of nine euro-zone countries.

It was expected that some of the big banks would continue struggling, especially those heavily involved in investment banking because that part of the financial system has clearly slowed down, said Bryant Evans, investment advisor and portfolio manager at Cozad Asset Management, in Champaign, Illinois.

While Wells Fargo #36;30.69, pulled back sharply from that peak and ended up just 0.7 percent at 29.81.

The Nasdaq outperformed the other major U.S. stock indexes, with shares of Applied Materials (AMAT.O) up 2.4 percent at 11.78. RBC upgraded the stock to outperform. An index of semiconductor stocks (.SOX) advanced 0.5 percent.

The benchmark S#36;29.60 as its Italian unit, Costa Crociere, struggled to locate missing passengers after a cruise liner capsized. Fellow cruise operator Royal Caribbean Cruises Ltd (RCL.N) fell 6.2 percent to 26.97.

On the U.S. economic front, a gauge of manufacturing in New York State rose to its highest level in nine months, keeping in line with the trend of modest improvement in U.S. economic data.

Volume totaled 6.8 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, just above the daily average of 6.68 billion.

Advancing stocks outnumbered declining ones on the NYSE by about 3 to 2, while on the Nasdaq, advancers beat decliners by about 13 to 12.

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