Wall Street Pares Losses On Citigroup Mortgage News

January 8, 2009 5:52 p.m. EST

New York, NY (AHN) - Sellers controlled market action for the majority of Thursday's session after disappointing holiday-sales from the retail sector pressured markets early. However, news that Citigroup reached a deal with lawmakers to help stem home loan foreclosures rallied markets back to flat.

The International Council of Shopping Centers reported U.S. December same-store sales fell 1.7 percent in what has become the worst holiday-shopping season in roughly 40 years.

The news pressured markets until the Citigroup news sparked a late rally. The bank reached a deal with lawmakers that would let bankruptcy judges alter home loans in an effort to avoid foreclosures.

The late rally helped the Dow Jones Industrial pare a large chunk of losses, finishing down 27 points or 0.3 percent. 16 of 30 Dow components finished Thursday with a gain.

Alcoa, up 4.3 percent led Dow gainers as the aluminum maker rebounded from Wednesday's sell-off.

Wal-Mart, down 7.5 percent was the largest Dow laggard as shares were pressured after the company reported disappointing December sales and slashed fourth quarter earnings guidance.

The S&P 500 added 3 points or 0.3 percent. Eight of 10 economic sectors finished Thursday with a gain. Consumer staples, down 1.3 percent and financials, down 0.2 percent were the only laggards.

Tech was strongest as the Nasdaq Composite added 18 points or 1.1 percent. The sector was led by the big-cap tech names with the Nasdaq 100 adding 1.1 percent as well.

Crude oil fell for a second consecutive day, down 93 cents to settle at $41.70 a barrel on the New York Mercantile Exchange.

In economic news, consumer credit fell $7.9 billion in November as consumers continue to tighten their purse strings and reduce debt levels.

For Friday, all eyes will be on the Labor Department's release of non-farm payrolls and the unemployment rate, due for release at 8:30 a.m. ET.