Wall Street Sways On Mortgage Plans

Stocks faltered again in New York Wednesday, as investors wrestled with viability plans from two of Detroit's automakers, digested the Commerce Department's latest report on the housing market and mulled the Obama administration's housing market plan.

After Tuesday's close, Chrysler and General Motors (nyse: GM - news - people ) filed restructuring updates with the Treasury Department. The reports were a condition of a $13.4 billion loan package that the carmakers received from the government late in 2008. Both companies said they are making progress, but will need additional loans to outlast the downturn in consumer spending that has crippled domestic auto sales. GM, which said it could need more than $30.0 billion by 2011 in order to remain on pace for sustainable profitability by 2012, gained 6 cents, or 2.8%, to $2.24 Wednesday. (See "Loans Can't Bridge Detroit Disconnect.")

The major averages opened higher on a reflex to a steep drop Tuesday, but less than an hour into the session stocks had slipped back into the red. The Dow Jones industrial average was down 60 points, or 0.8%, to 7,493; and the Nasdaq fell 11 points, or 0.8%, to 1,459; while the Standard & Poor's 500 lost 7 points, or 0.9%, to 782, threatening to test its Nov. 2008 lows.

The Treasury offered an outline of the housing plan Wednesday morning, which includes additional preferred stock purchase agreements with Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ), help with refinancing and $75.0 billion for loan modifications that would include government subsidies for certain homeowners at risk of foreclosure. President Obama is due to explain the plan in Arizona later in the day. Earlier Wednesday, the Commerce Dept. said housing starts and completions were down sharply in January, as were permits for new building. (See "Fannie And Freddie Redux.")

Bond insurer MBIA (nyse: MBI - news - people ) announced it will split itself in two, establishing a separate public finance guarantee insurance company that will concentrate on municipal bonds. The move would shield the firm's muni bond business from its activities in structured finance and international bonds. Shares of MBIA gained $1.33, or 38.2%, to $4.81, early in the session.

Deere & Company (nyse: DE - news - people ) lost $1.66, or 5.0%, to $31.83, after the farm equipment maker's first-quarter earnings fell short of analyst expectations. On an encouraging note, Deere said it has not had trouble accessing credit to fund its own needs and financing for customers.

Federal Reserve Chairman Ben Bernanke will make a speech on the central bank's balance sheet in Washington Wednesday afternoon, and the Fed's minutes from its January monetary policy meeting will be released shortly afterward.

Thomson Reuters contributed to this article.