Published on Reuters
By Jennifer Coogan
November 27, 2007 – Stocks rose on Tuesday after Citigroup Inc. got a $7.5 billion capital injection from Abu Dhabi, bolstering confidence in financial shares and helping stocks recover some of Monday’s steep losses.
The investment in Citigroup may help stocks emerge from their November slump, a slide that on Monday dragged major indexes 10 percent or more below 52-week highs set in October. A 10 percent decline is considered a market correction.
“Financials are a big part of the market and they affect investor psychology,” said Alan Lancz, president, Alan B. Lancz & Associates Inc., an investment advisory firm based in Toledo, Ohio. “But it’s a first step. We’re not out of the woods yet.”
The Dow Jones industrial average <.DJI>was up 115.75 points, or 0.91 percent, at 12,859.19. The Standard & Poor’s 500 Index <.SPX>was up 11.22 points, or 0.80 percent, at 1,418.44. The Nasdaq Composite Index <.IXIC>was up 28.96 points, or 1.14 percent, at 2,569.95.
In a sign investors may be bracing for a worsening economy, Altria Group Inc , parent of the Philip Morris tobacco companies, were the top gainer on the Dow, rising 2 percent to $72.85.
Several reports gave a dismal picture of the economy, including a decline in consumer confidence to a two-year low.
The Conference Board said its index fell to its lowest in two years on concerns about rising gas prices and financial market volatility.
In addition, U.S. existing single-family home prices, as measured by the S&P/CaseShiller index on Tuesday, suffered the largest quarterly decline in the index’s 21-year history.
Citigroup shares rose 1.3 percent to $30.18. Other top gainers in the sector were shares of JPMorgan Chase, up 2.3 percent to $41.37.
Abu Dhabi Investment Authority, the world’s largest sovereign wealth fund, is purchasing a 4.9 percent stake of Citigroup, the largest U.S. bank.
Energy stocks fell as oil tumbled 3 percent on expectations of an OPEC supply boost. Late-month crude futures were trading at $94.85 a barrel.
Exxon Mobil shares were down 1.3 percent to $84.54 and Chevron’s stock lost 1.5 percent to $82.53.
Shares of Staples shot up 10.3 percent to $21.80 after the office supply retailer reported quarterly profit that topped analysts’ estimates.