Markets began higher on Tuesday, quickly turned negative, and roughly 90 minutes into the session have nearly bounced back to parity. News from around that nation has been mixed on Tuesday, with financial institutions beefing up capital, prices of houses falling in the first quarter, and the trade deficit expanding as expected.
As of 11 am EST, the Dow had moved up 0.8% to 8425, while the S&P was still down t0.38% to 905.80, and the Nasdaq was down 0.87% to 1715.89.
In an effort to shore up fresh capital, Bank of America has apparently sold $7.3 billion worth of shares in China Construction Bank, a non-core asset, to a group of investors. BofA, which has not yet made an official announcement of the deal, would still own about 10.6% of the institution, which is one of China’s “big four” banks.
Various media outlets also reported that Citigroup has approved using the taxpayer money it received to begin new lending programs. The initiatives total almost $44.75 billion, or nearly all of the $45 billion Citi received from the government.
The major data point of the morning was the release of the Trade Balance for March, which expanded in line with expectations to $27.6 billion.
“The March trade figures showed export and import volumes falling, but still hinted at stabilization in world trade,” said Nigel Gault, chief U.S. economist at IHS Global Insight.
Total exports shrank by $3.0 billion in the month to $123.6 billion, while imports saw their eighth consecutive drop with a $1.6 billion fall to $151.2 billion.
“The steepest export declines are behind us,” Gault added. “But given the weak state of overseas economies, we do not expect the U.S. recovery to be export-led. As U.S. recovery does begin to take hold it will mean an increase in imports as U.S. demand recovers. As a result, the trade deficit will likely widen later this year.”
In the housing sector, the National Association of Realtors said the national median home price fell 14% in the first quarter, as foreclosure sales provide major discounts.
The national median price was for a single-family home was $169,000, 13.8% below the Q1 2008 price. First-time home buyers accounted for half of all purchases, the NAR said, noting that prices fell in 134 of the 154 metropolitan areas covered in the survey.
Lawrence Yun, chief economist at the NAR, said nearly 455,000 buyers purchased their first home in the year’s first quarter, and he expects the trend to continue throughout the year.
“Housing affordability conditions are at record high levels and we expect a measurable increase in home sales during the second half of the year, which would help stabilize prices in most areas.”
Tuesday also saw the release of two weekly retail sales reports. The ICSC-Goldman Sachs survey found a year-over-year gain of 0.5% in the week ending May 9, while the Johnson Redbook report posted a gain of 0.3%. The monthly retail sales report for April will be published Wednesday morning.
Later today, at 2pm, the Treasury will release its Monthly Budget Statement for April, which is expected to show a deficit of $28 billion, a stark contrast to the April 2008 surplus of $159 billion.
The annual deficit is already twice as big as it was this time last year, and looking ahead, the 2009 fiscal statement is shaping up for a $1.8 trillion deficit.