Bulls Stage a Comeback

The Dow dropped 281.42 points, or 2.09%, to close at 13,181.91. The S&P 500 tumbled 39.14 points, or 2.66%, to 1433.06, and the Nasdaq ended down 64.73 points, or 2.51%, at 2511.25.

Bear Stearns, which was hit by news Friday that Standard & Poor's had cut its outlook on the company, said over the weekend that Warren Spector, its co-president and co-chief operating officer, has resigned. Spector had overseen the bank's asset-management division, the home of two hedge funds that blew up after making bets on the subprime mortgage markets.

Bear Stearns was lower for most of the day, but finished with a late-session gain of $5.46, or 5%, to $113.81.

Despite Bear's early weakness, the financial sector was boosted by a UBS upgrade of Merrill Lynch (MER Quote - Cramer on MER - Stock Picks) to buy from neutral. UBS cited the bank's valuation after a 12% drop over that last two weeks. The stock added $4.50, or 6.4%, to $74.55.

UBS also upgraded TD Ameritrade (AMTD Quote - Cramer on AMTD - Stock Picks) to buy, and the firm reiterated its buy rating on Deutsche Bank (DB Quote - Cramer on DB - Stock Picks). TD Ameritrade finished with a gain of 1.9% at $16.29. Deutsche Bank rose 2.9% to end at $138.08.

However, not all was positive in the financial sector. Shares of American Home were halted on the New York Stock Exchange after news that the company has filed for bankruptcy protection.

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