(Updates with more on Cisco CEO's view in paragraph 2, adds
Kenneth Cole after the bell in paragraph 16, oil and volume)
By Ellis Mnyandu
NEW YORK, March 4 (Reuters) - The Dow and S&P 500 fell on
Tuesday as bank stocks slid on a broker warning about more
losses at Citigroup and the Federal Reserve chairman said
mortgage delinquencies and foreclosures were likely to rise.
But the Nasdaq ended little changed after Cisco Systems
Inc's <CSCO.O> chief executive said he is more confident in the
company's long-term growth, easing concerns about business
spending.
The day got off to a rough start after Merrill Lynch & Co
forecast a $15 billion loss at Citigroup Inc <C.N>, sparking a
4.3 percent slide in its shares and pushing the S&P financial
index down to a fourth straight day of losses.
"There's just uneasiness with the financials and the
potential for the continuation of the credit problems," said
Stephen Carl, principal and head of U.S. equity trading at the
Williams Capital Group in New York.
The Dow Jones industrial average <> fell 45.10 points,
or 0.37 percent, to 12,213.80. The Standard & Poor's 500 Index
<.SPX> dropped 4.59 points, or 0.34 percent, to 1,326.75. But
the Nasdaq Composite Index <> inched up 1.68 points, or
0.07 percent, to 2,260.28.
CNBC television reported that a deal to rescue ailing bond
insurer Ambac Financial Group <ABK.N> was near, pushing the
company's shares up nearly 8 percent and helping the broader
market cut losses during the session's last hour.
"The Ambac news started the recovery and Cisco comments
pushed it further and then you got a bunch of short covering.
You don't want to get caught short late in the day," said Joe
Saluzzi, co-manager of trading at Themis Trading in Chatham,
New Jersey.
At one time during the day, the S&P 500 index traded near
its Jan. 22 close of 1,310.
A TURNAROUND IN TECH
After spending most of the day in the red following a
reduced profit margin forecast from Intel Corp <INTC.O>, the
Nasdaq edged higher as reassuring comments from networking
equipment maker Cisco eased worries about tech spending.
Even so, concerns about the financial sector's outlook
dominated, causing shares of Citigroup, the largest U.S. bank
when ranked by assets, to finish down 4.3 percent at $22.10 on
the New York Stock Exchange.
Shares of Bank of America Corp <BAC.N>, the No. 2 U.S. bank
by assets, fell 1 percent to close at $38.78, and shares of
JPMorgan Chase & Co<JPM.N>, the No. 3 U.S. bank, slid 1.6
percent to $39.19.
Other financial companies, including insurer American
International Group Inc <AIG.N>, fell 1.8 percent to $45.83.
The S&P financial index <.GSPF> , down nearly 1 percent, capped
its longest string of losses since December.
A pullback in oil prices and other commodities also curbed
the broader market. U.S. crude oil for April delivery ended
below $100 a barrel -- falling $2.93 to settle at $99.52.
But on the Nasdaq, shares of Apple Inc <AAPL.O> contributed
the most to the index's slight uptick, finishing up 2.4 percent
at $124.62. The company reiterated its 2008 sales target of 10
million iPhones, a goal that some analysts have questioned in
the face of a weaker U.S. economy.
Cisco shares finished off 0.5 percent at $24.29 and Intel
shares dipped 0.1 percent to $20. Earlier, Intel shares had
fallen as low as $19.44.
An index of semiconductor stocks <.SOXX> gained 0.8
percent.
SHOE DROPS AT KENNETH COLE
After the bell, shares of footwear and clothing company
Kenneth Cole Productions Inc <KCP.N> tumbled more than 14
percent to $13.15 after the company reported a fourth-quarter
loss and slashed its dividend. For details, see
[]
In a speech in Florida, Federal Reserve Chairman Ben
Bernanke said more declines in house prices could be expected.
The housing slump has had a damping effect on consumer
confidence and spending, which is a strong element of economic
growth.
Fed Vice Chairman Donald Kohn told a hearing of the Senate
Banking Committee that U.S. banks should consider slashing
dividends to ease the strain on balance sheets laden with bad
debts.
Also hurting financials was Wachovia's reduction of its
earnings estimates on four U.S. investment banks, including
Bear Stearns Co Inc <BSC.N>, saying the first quarter for
investment banks would be one of the worst in several years.
Volume was moderate on the New York Stock Exchange, where
about 1.79 billion shares changed hands, below last year's
estimated daily average of 1.9 billion. On the Nasdaq, about
2.70 billion shares traded, above last year's daily average of
2.17 billion.
The market's breadth was decidedly negative, with decliners
outnumbering advancers by a ratio of about 2 to 1 on the NYSE
and about 3 to 2 on the Nasdaq.
(Reporting by Ellis Mnyandu; Editing by Jan Paschal)
