Wall St Week Ahead: Stocks eye Citigroup, Geithner's next moves

By Deepa Seetharaman

NEW YORK (Reuters) - Wall Street faces stiff headwinds in the week ahead, the fate of Citigroup largest among them, that stand in the way of building on Friday's big rally and preventing November from winding up as one of the worst months for stocks on record.

The holiday-shortened week begins with President-elect Barack Obama introducing his economic team, including expectations he will formally nominate Timothy Geithner, president of the New York Federal Reserve Bank, as his secretary of the Treasury. It will end with the first key indication on how much consumers will spend this holiday season.

Investors will be looking to Obama and Geithner for signals on what they'll do to stem the economic crisis.

In the past week alone, markets erased more than a decade of gains as banks, led by Citigroup (C.N), touched new lows and worries mounted about the likelihood of a bailout for automakers. Stocks also reeled from a slew of negative data that put U.S. new jobless claims at a 16-year high.

"The market is still going to remain concerned regarding the state of the financials and the huge meltdown in the banks," said Fred Dickson, market strategist of D.A. Davidson & Co in Lake Oswego, Oregon.

Key economic indicators on tap for next week include existing-home sales for October, consumer sentiment and confidence, and weekly U.S. jobless claims data.

But market-watchers will hone in on Citigroup over the weekend for any developments as to the future of the bank, the second-largest in the United States by assets.

Citigroup's board is meeting Friday to discuss the bank's options, according to a person familiar with the matter. The bank could sell parts of the company, or merge with another institution.

The meeting came amid reports that directors were looking to replace Citigroup's chief executive, Vikram Pandit, and Citigroup was cutting additional staff in Japan.

"Hopefully it'll be a positive news story, whether it be a sale of the company, a restructuring, a new management -- the market will take anything at this point," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

"That would probably continue a rally on Monday morning. If we get nothing out of Citibank, we have a little bit of a problem on Monday morning."

Citigroup's shares shed 20 percent on Friday to close at $3.77, for a loss of around 60 percent for the week. In after-hours trade on Friday Citi shares rose 6.6 percent.

WORST MONTH FOR STOCKS

For the week, the Dow lost 5.3 percent, the S&P 500 fell 8.4 percent, and the Nasdaq lost 8.8 percent, even after all three indexes surged more than 5 percent on Friday.

The dismal week capped off a historic November that is quickly becoming one of the worst months for U.S. stocks since October 1987.  Continued...