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U.S. Stocks Shed Gains; Nasdaq Falters Into Negative Territory

NEW YORK (MarketWatch) -- Wall Street on Tuesday failed to maintain an early bounce as investors struggled to move their focus beyond the credit-related troubles that have been dogging financial stocks.

"It was a very narrow bounce to begin with - the momentum guys are getting corralled into a lesser and lesser amount of stocks; it's now down to Google and Apple," said Peter Boockvar, equity strategist at Miller Tabak.

"We also have the financials, which tried to rally but gave up, and poor action in retailers due to another spike in crude," said Boockvar.

Up more than 50 points early on, the Dow Jones Industrial Average was more recently 9.5 points ahead, at 13,552.9.

Of the Dow's 30 components, 13 were higher, led by American International Group Inc. , up 2%.

Not all of the blue-chip financials followed suit, however. Embattled Citigroup Inc. saw its shares move down 2.5% amid reports that the same executive who steered its role in the rescue of collapsed hedge fund Long-Term Capital Management has been tapped to run a new dedicated subprime unit.

Citi's shares were also downgraded to neutral from buy by Bank of America Securities analysts, who cited "eroding confidence in earnings and book value." .

The S&P 500 advanced 1.61 points to 1,503.78, while the Nasdaq Composite shed all of its gains to fall into negative territory, recently lapsing 6.28 points to 2,788.90.

Volume on the New York Stock Exchange hit 488 million shares, with declining stocks ahead of advancers 8 to 7. On the Nasdaq, 902 million shares exchanged hands, and decliners outpaced advancing stocks about 8 to 5.

The technology sector also was in focus. Overnight, shares of Alibaba.com almost tripled in their Hong Kong debut, marking a successful start for the world's largest initial public offering by an e-commerce company since Google Inc.

Yahoo Inc. holds a roughly 40% stake in Alibaba.com.

Beazer Homes USA Inc. gained 0.5% after the home builder said it would end dividend payments and cut 650 jobs to firm up its capital position.

Crude awakenings

In energy trading, crude-oil futures moved almost inexorably higher, briefly touching $97 a barrel for the first time ever.

In foreign exchange, the dollar fell against the euro ahead of Thursday's European Central Bank interest-rate decision, with the ECB widely expected to hold its benchmark steady at 4%.

The euro was trading at $1.4561 after earlier rising to $1.4571, its highest level since it began trading in January 1999. The greenback was buying 114.49 yen, compared with 114.53 yen in late U.S. trading Monday.

Weakness in the dollar was seen as a factor helping both crude-oil and gold futures extend their recent rallies.

In Europe, stocks maintained gains and stood poised to end a three-session losing streak as investors bought into the hard-hit resources sector. Earnings from Marks & Spencer and Swiss Re also won investors' applause. .

Elsewhere overseas, Asian markets ended mixed after a volatile session. .

By Kate Gibson

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