By Ellie Ismailidou and Carla Mozee, MarketWatch

Bank stocks crumble; Janet Yellen testimony looms

U.S. stocks were dipping in and out of positive territory Tuesday, boosted by a rally in the materials and tech sectors amid a continuing global equity selloff fueled by fears of economic slowdown.

All three main benchmarks opened in negative territory, turned positive but later struggled to hold on to gains.

The S&P 500 was down less than a point, or less than 0.1%, at 1,852. The Dow Jones Industrial Average was down 40 points, or 0.2%, at 15,991. The Nasdaq Composite was up 18 points, or 0.4% to 4,301.

As oil prices dipped in and out of positive territory, the energy sector was the S&P's second-worst performer, down 1.4%. The telecommunications sector was the worst performer, down 1.6%.

But a rally in the tech sector, which was severely hit during Monday's rout, helped lift the main indexes, particularly the tech-heavy Nasdaq. The recent tech selloff had battered the so-called FANG stocks: Facebook, Amazon, Netflix and Google parent Alphabet. On Tuesday, Facebook (FB) was up nearly 2%, Amazon (AMZN) gained 1%, Netflix (NFLX) climbed 4.2% and Alphabet (GOOGL) rose 1.7%.

Pressure on oil prices and continuing worries about a slowdown in global economic growth were behind a stock selloff that hit global markets earlier. It began in Japan, where the Nikkei Stock Average closed more than 5% lower, its biggest decline since 2013, and the 10-year Japanese benchmark yield fell into negative territory for the first time ever.

Oil prices (http://www.marketwatch.com/story/oil-rises-as-downbeat-iea-report-fails-to-add-to-pessimism-2016-02-09) leaned higher, as they shrugged off a downbeat report from the International Energy Agency (http://www.marketwatch.com/story/iea-warns-oil-surplus-will-be-worse-than-expected-2016-02-09). Brent oil fell.

Read:Oil industry woes grow as storage levels hit 'critical level' (http://www.marketwatch.com/story/oil-industry-woes-grow-as-storage-levels-hit-critical-level-2016-02-08)

Companies in the energy space with balance-sheet issues continue to get severely punished, said Tim Anderson, managing director at MND Partners. He cited Chesapeake Energy corp. (CHK), which was flat Tuesday after plunging 33% on Monday, and Williams Companies Inc. (WMB), which recovered 4% in early trade after a 35% loss Monday.

If the "quality names" in the oil sector, namely "big multinationals positioned to survive any shakeout" can outperform the commodity "today, and maybe throughout the week it could be an early sign of a change in sentiment toward the sector," Anderson said.

Bank stocks fell amid worries about the impact of record-low interest rates and deteriorating credit conditions on banks' balance sheets. Goldman Sachs Group Inc. (GS) and J.P. Morgan Chase & Co. (JPM) were among the Dow industrials leading decliners.

U.S. stocks finished sharply lower (http://www.marketwatch.com/story/oil-industry-woes-grow-as-storage-levels-hit-critical-level-2016-02-08)on Monday (http://www.marketwatch.com/story/dow-futures-drop-200-points-setting-wall-street-up-for-an-ugly-start-2016-02-08), but off their worst levels. (http://www.marketwatch.com/story/dow-futures-drop-200-points-setting-wall-street-up-for-an-ugly-start-2016-02-08)The Nasdaq Composite fell 1.8% on heavy losses for shares of Facebook Inc. (FB) and Amazon Inc. (AMZN). The S&P 500 fell 1.4% and the Dow Jones Industrial Average stumbled 178 points, or 1.1%.

Read:Why a few money-making tech stocks won't make up for the big losers (http://www.marketwatch.com/story/why-a-few-money-making-tech-stocks-wont-make-up-for-the-big-losers-2016-02-09)

"[I]t's going to be a case of watching Wall Street to see if the gains we saw coming in towards the close last night can be extended," said Tony Cross, market analyst at Trustnet Direct, in a note.

"This really could go either way, but building fears of a global slowdown do seem to have the potential to push back the next round of U.S. rate hikes. Anything that adds weight to this argument can only mean more good news for stocks," he said.

Yellen ahead: The moves come ahead of the marquee event for U.S. markets this week: Fed Chairwoman Yellen's semiannual testimony before House and Senate committees on Wednesday and Thursday.

"The market is starting to price out any more rate hikes from the Fed in 2016, let alone at the March meeting. Anything from Janet Yellen that confirms or denies that thinking will see markets react as the feeling that the Fed acted too early in December continues to grow," said James Hughes, chief market analyst at GKFX, in a note.

Read:Five questions Janet Yellen must answer (http://www.marketwatch.com/story/five-questions-janet-yellen-must-answer-2016-02-09)

Economic data: A report on U.S. job openings, known as JOLTS, jumped to 5.6 million in December (http://www.marketwatch.com/story/job-openings-jump-to-56-million-in-december-second-highest-on-record-2016-02-09), the second-highest on record. Yellen has said she pays close attention to the quit rate, a proxy of worker confidence, included in the report.

But inventories at U.S. wholesalers fell in December (http://www.marketwatch.com/story/wholesale-inventories-fall-for-third-month-in-row-2016-02-09)for the third straight month, another sign companies cut back on restocking toward the end of 2015 amid softer sales.

Earnings: Coca-Cola Co. (KO) reported fourth-quarter revenue (http://www.marketwatch.com/story/coca-cola-revenue-beats-but-profit-falls-short-2016-02-09) of $10 billion, above expectations of $9.9 billion, but per-share earnings of 28 cents were below Wall Street's forecast of 37 cents. Coke slipped 0.3%.

Drugstore chain operator CVS Health Corp. (CVS) reversed losses to trade 0.4% higher after the company posted fourth-quarter sales and profit that met expectations (http://www.marketwatch.com/story/cvs-growth-boosted-by-acquisitions-pharma-2016-02-09).

Wendy's Co.'s (WEN) preliminary fourth-quarter adjusted profit (http://www.marketwatch.com/story/wendys-profit-revenue-beats-expectations-2016-02-09) of 12 cents a share beat expectations and the company anticipates same-store sales growth above what analysts were projecting. Wendy's shares lost 2%.

Goodyear Tire and Rubber Co. (GT) rallied 7.7% despite the company's report of a fourth-quarter loss (http://www.marketwatch.com/story/goodyear-posts-loss-as-it-books-charges-2016-02-09) as a write-down of the company's Venezuela operations, currency fluctuations and a one-time tax benefit the previous year masked financial results that beat analyst estimates.

Sears Holdings Corp. (SHLD) lost 1.6% after the company warned its fourth-quarter revenue would fall short (http://www.marketwatch.com/story/sears-warns-on-sales-to-speed-up-store-closures-2016-02-09) of expectations, prompting the retailer to accelerate store closures and make deeper cost cuts.

After the bell, Tesla Motors Inc. (TSLA) is forecast to report adjusted fourth-quarter earnings of 16 cents a share. Read:Tesla earnings: Model 3 spending, Model X sales in focus (http://www.marketwatch.com/story/tesla-earnings-model-3-spending-model-x-sales-in-focus-2016-02-05)

Other markets:Bank shares fell (http://www.marketwatch.com/story/european-stocks-get-clobbered-again-as-banks-slump-2016-02-09) in Europe amid a broad drop in European stock markets. Investors seeking safety pushed the yen higher against the U.S. dollar (http://www.marketwatch.com/story/panicked-investors-flock-to-the-yen-shredding-the-dollar-2016-02-09), and a rush to Japanese bonds drove the yield on the benchmark 10-year government bond into negative territory for the first time.

Gold prices turned down, trading below $1,200 an ounce.

 

(END) Dow Jones Newswires

February 09, 2016 10:44 ET (15:44 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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