Stocks Head Lower; Citigroup in Focus

NEW YORK — U.S. stocks were moving toward a lower opening Tuesday after Citigroup Inc. announced a hefty $18.1 billion writedown for bad mortgage assets and slashed its dividend.

The news of Citigroup's drastic efforts to shore up its balance sheet had been widely expected. Still they were a forceful reminder that the financial sector remains under severe strain and they kept investors in a fretful frame of mind.

However, hope that major financial companies will find innovative solutions for their ills was stirred by news from Merrill Lynch & Co. Inc. of agreements with three investment banks that will raise $6.6 billion for its coffers. Citigroup also announced a massive capital injection.

The futures contract for the Dow Jones industrial average was down 24 points at 12,774, Standard & Poor's 500 futures were off 4.80 points at 1,415.50 and the Nasdaq 100 contract down 5.80 points at 1,949.2.

Treasurys moved higher in early trade, as crude oil futures came under a touch of pressure.

Since the start of the year, an indecisive stock market has vacillated between rallies and selloffs, as market players try to discern whether the economy has begun to shrink or is just slightly slowed by troubles in the credit and housing markets.

On Tuesday, new retail sales, producer price and regional manufacturing reports should offer some clues. According to Thomson/IFR economists, the Commerce Department's retail sales report should show a decline of 0.4 percent for December, meaning that even the holiday shopping season did not rouse a troubled consumer.

The research firm also expects a relatively small 0.2 percent gain in the Labor Department's producer price index for last month, which would be down sharply from 3.2 percent in November.

The New York Federal Reserve will also issue its Empire State Manufacturing Index.

More clues on the state of the economy and corporate America should come this week as fourth-quarter earnings season gets into full swing. Results of technology bellwether Intel Corp. after the close will be studied carefully.

On Monday IBM Corp. delivered a pleasant surprise by revealing that the favorable impact of the weak dollar in its overseas operations helped it post earnings well above expectations. Investors are hoping that currency impact also will bolster the reports of other multinational companies.

In overseas trade, Japan's Nikkei Stock Index closed 0.98 percent lower. In Europe, London's FTSE 100 was down 1.12 percent, Frankfurt's DAX lost 0.66 percent and Paris' CAC gave up 0.79 percent.

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