Midday Commentary: Market treads water as government seeks debt deal; Citigroup mixed on earnings

By Stephanie N. Rotondo

Phoenix, Oct. 15 - A preferred stock trader said that the marketplace was being "held up" by the federal government's "back and forth" regarding a debt ceiling deal.

Early in the session, news outlets were reporting that Congress was optimistic a deal could get done as soon as Wednesday. According to reports, the current deal on the table would extend the borrowing limit until January.

"That would be good," the trader said of the extension, adding that it could mean a resurgence of new issues.

"I think people would want to get back to the norms of investing," he said, given that "a fear of default would be off the table."

As of midday, the Wells Fargo Hybrid and Preferred Securities index was trading down 1 basis point.

Citigroup Inc.'s preferreds were mixed after the bank reported a $3.2 billion profit for the third quarter. That equaled $1 per common share.

Excluding certain adjustments, the profit was $1.02 per share, which was still below analysts' expectations of $1.04 per share.

Revenues improved by 31% to $17.90 billion, though that was also lower than expectations of $18.73 billion.

The 7.125% series J fixed-to-floating rate noncumulative preferreds (NYSE: CPJ) fell 4 cents to $25.73, while the 7.875% fixed-to-floating rate trust preferreds (NYSE: CPN) rose 3 cents to $27.40.

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