US stocks finished mostly higher on Tuesday as investors welcomed news that Citigroup is going ahead with its plan to sell its stake in retail brokerage unit, Smith Barney, to Morgan Stanley. 

The Dow Jones Industrial Average fell 25.41 points or 0.30% to finish at 8,448.56. The S&P 500 climbed 1.53 points or 0.18% to 871.79. The Nasdaq Composite added 7.67 points or 0.50% to end at 1,546.46.

Citigroup (NYSE: C) jumped 28 cents or 5% to $5.88. According to reports, Citigroup is contemplating merging its Smith Barney unit with the Morgan Stanley's (NYSE: MS) brokerage unit. Meanwhile, The Financial Times said that CEO Vikram Pandit intends to break-up the embattled group into a “bad bank” an a “good bank" in order to ensure bank’s survival. Shares of the company earlier fell on fears that it will report huge fiscal fourth quarter loss.

Bank of America (NYSE: BAC) plunged 83 cents or 7.26% to $10.60.JP Morgan (NYSE: JPM) rose $1.40 or 5.62% to $26.31.

Shares of Alcoa (NYSE: AA) dropped 51 cents or 5.07% to $9.55. Late on Monday, Alcoa Inc. (NYSE: AA) reported a quarterly loss of $1.19 billion, or $1.49 a share, compared with net income of $632 million, or 75 cents a share in the corresponding quarter of 2007. It is for the first time in six years that the company has posted a loss. The company booked restructuring, impairment and special charges amounting to 88 cents a share in the quarter. The loss from continuing operations was $1.16 a share. Revenue decreased 18.5% to $5.7 billion from $7.0 billion in the year ago quarter.

Boeing Co. (NYSE: BA) decreased $1.33 or 3.04% to $42.41.

General Electric (NYSE: GE) skidded 94 cents or 5.94% to $14.89 after Barclays Capital analyst Robert Cornell said that as much as 20 cents of the firm's projected fourth-quarter profit of 36 cents to 42 cents per share could come from tax benefits.

Pfizer Inc. (NYSE: PFE) rose 24 cents or 1.38% to $17.60 after the world's largest drugmaker, will fire 800 scientists this year in an effort to cut costs and focus research on 'promising' areas. Pfizer company spokeswoman Kristen Neese said on Tuesday that the company aims to eliminate global research positions by 5% to 8% out of a total 10,000.
 
Energy stocks rallied as crude oil bounced back. Exxon Mobil Corp. (NYSE: XOM) increased $1.19 or 1.55% to $77.73. Chevron Corp. (NYSE: CVX) surged $1 or 1.41% to close at $71.82.

Shares of Sony Corp. (NYSE: SNE) lost 86 cents or 3.72% to $22.24. The Japanese electronics giant may post Y100 billion or $1.1 billion as operating loss in the fiscal year ending March 31, a report published yesterday said. According to the leading Japanese business daily, the Nikkei, Sony Corp. is likely to suffer an annual loss for the first time in 14 years due to economic downturn, weaker demand, stronger yen, increased competition and restructuring charges.

Technology stocks retreated.