U.S. stocks rose modestly on Tuesday as a dividend hike at IBM and reassuring data that could signal a bottom in the economic cycle offset concerns that major banks may need to raise more money.
Worries over the economic impact of the threat of a flu pandemic persisted, as New Zealand and Israel were the latest countries to confirm cases of a new strain of flu linked to dozens of deaths in Mexico.
International Business Machines Corp
The Wall Street Journal reported that U.S. regulators have told Bank of America Corp
IBM is strong, and that is also helping the Dow, and some tech stocks are a little firmer, said David Bellantonio, head of trading at Instinet in New York.
There is not a ton of conviction, but considering the negative news (on banks) it seems to be pretty good.
Bellantonio said the flu outbreak is a concern, adding that it was difficult to say if it is having a specific effect on the market.
The Dow Jones industrial average <.DJI> gained 8.36 points, or 0.10 percent, to 8,033.36. The Standard & Poor's 500 Index <.SPX> edged up 0.74 points, or 0.09 percent, to 858.25. The Nasdaq Composite Index <.IXIC> rose 5.19 points, or 0.31 percent, to 1,684.60.
Citigroup is talking to the U.S. government about its capital levels after receiving early results of its stress test, but if it needs more capital, the bank does not expect to get it from the government, people familiar with the matter told Reuters.
Bank of America shares tumbled 6 percent to $8.39, and Citigroup lost 5 percent to $2.92, but both were off session lows. The KBW Bank index <.BKX> slid 1.5 percent.
On the economic front, a report showed prices of single-family homes fell in February, but the rapid pace of decline slowed. Consumer confidence rose to its highest this year with some expectations the recession is reaching a bottom.
(Reporting by Rodrigo Campos; editing by Jeffrey Benkoe)