Stocks continue to show notable weakness in early afternoon trading on Tuesday, as investors lock in profits following the massive gains seen in the previous session. Nonetheless, selling pressure has remained somewhat subdued, allowing the major averages to hold onto the bulk of Monday's gains.
The relatively limited weakness in the markets comes as some traders are keeping a close eye on Capitol Hill and the testimony of Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim before the Geithner before the House Financial Services Committee.
In prepared remarks, Bernanke said that the bonuses paid to employees of AIG (AIG) were highly inappropriate. At the same time, Bernanke outlined the reasoning behind the government's repeated interventions to prop up AIG despite severe mismanagement within the embattled insurance giant.
Meanwhile, Geithner suggested that the near-collapse of the systemically important insurer highlights broad failures of the U.S. financial system. He went on to call the $165 million in bonus payments deeply troubling and outlined the Treasury's efforts to recoup the bonuses.
Geithner pledged to work on improving the regulatory structure in order to prevent another similar situation.
The major averages have been more or less rangebound in recent trading, stuck firmly in negative territory. The Dow is currently down 55.99 at 7,719.87, the Nasdaq is down 24.86 at 1,530.91 and the S&P 500 is down 7.49 at 815.43.
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