(RTTNews) - Stocks continue to turn in a lackluster performance, with the major averages bouncing back and forth across the unchanged line as Friday’s trading moves into the mid-afternoon. Despite some positive corporate news, gains have been minimal, as investors fear the weakness of the global economy.

According to a report in the Wall Street Journal, Citigroup (C) is exploring the possibility of selling parts of the company or an outright sale following the plunge in its stock price.

The WSJ said that internal discussions at Citigroup are at a preliminary stage and do not imply that Citigroup’s board and management have backed down from their stance that the company has ample funding, capital and strategic direction.

The report also said that the company’s board of directors is slated to have a formal meeting on Friday to explore the options.

Meanwhile, Philadelphia Federal Reserve economist Herb Taylor outlined the bleak near-term economic outlook during a presentation he gave earlier today. The forecast combined the Philadelphia Federal Reserve’s survey of forecasters as well as a recently released outlook from the National Association of Business Economists.

It’s “amazing how quickly the economic outlook has deteriorated in the last month or so,” he said, noting the drastic downward revisions to the surveys.

Released Monday, the Philadelphia survey revealed that forecasters project that GDP will decline 2.9 in the fourth quarter of 2008, and then by 1.1 percent in the first quarter of 2009. The projection represents a sharp downward revision from the forecast from the Philadelphia Fed only three months ago, when both the fourth quarter 2008 and first quarter 2009 were expected to see slightly positive GDP.

“In the last month or so the question has become not whether we are in a recession, but how long and how deep that recession will be,” he said.

Separately, in an interview with RTT News, John Forelli, portfolio manager at Independence Investments, called the market “extremely cheap and undervalued.” He went on to say that the biggest weight on the market is the lack of confidence in the U.S. financial system, noting that he believes investors are “overreacting.”

The major averages are currently turning in a mixed performance, with the Nasdaq currently posting a modest loss. While the Nasdaq is currently down 2.68 at 1,313.44, the Dow is up 36.24 at 7,588.53 and the S&P 500 is up 4.13 at 756.57.

Dow Components

As reflected by the uncertain trading in the blue chip average, the Dow components are split almost evenly between winners and losers on the day.

With a substantial decline of 22.7 percent, Citigroup has dropped to its lowest trading level in over a decade.

JP Morgan (JPM) and Bank of America (BAC) are following the lead of Citigroup, posting losses of 13.3 percent and 7 percent, respectively. The declines have taken JP Morgan to its lowest level in over five and a half years, while Bank of America is at a twelve and a half year low.

At the other end of the spectrum, Alcoa (AA) is one of the biggest gainers of the Dow components, up 12.4 percent on the day. With the gain, the aluminum producer has moved well off the sixteen-year closing low it set yesterday.

Other notable gains are being shown by Microsoft (MSFT), which is up 6.6 percent after being upgraded to Outperform at Oppenheimer, Disney (DIS), which is up 6.5 percent, and Hewlett-Packard (HPQ), which is posting a gain of 3.7 percent.

Sector News

With the considerable losses being posted by many financial institutions, the Dow Jones Banks Index is one of the worst performers of the major sector indices, posting a loss of 9 percent on the day. The decline has taken the index well below support and to its lowest trading level in over eight years.

Substantial losses are also being posted by real estate, railroad, and biotechnology stocks, as illustrated by the 3.7 percent loss by the Morgan Stanley REIT Index, the 4.3 percent decline by the Dow Jones Railroads Average, and the 4.3 percent loss being posted by the Amex Biotechnology Index.

At the other end of the spectrum, resource stocks continue to lead the advancing stocks. Currently, the Amex Gold Bugs Index is up 20.8 percent, as the price of gold has closed up $43.10 at $791.80 an ounce. Further, a modest increase by the price of crude oil has helped drive the Amex Oil Index up 5.4 percent.

Other Markets

In overseas trading, the stock markets in the Asia-Pacific region closed notably higher on Friday, ending a four-day losing streak. Japan’s benchmark Nikkei 225 index ended the session with a gain of 2.7 percent.

Meanwhile, the major European markets closed substantially lower despite showing earlier strength. The French CAC 40 Index and the German DAX Index ended the day down 3.3 percent and 2.2 percent, respectively, while the U.K.’s FTSE 100 Index fell 2.5 percent by the close of trading.

In the bond markets, treasuries are well off their lows of the day but continue to show notable weakness. Subsequently, the yield on the benchmark ten-year note is currently up 3.4 basis points at 3.178 percent.

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Posted in Categories: Economy, Eurozone, Japan, Releases, USA.

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