Late Selling Hits Stocks

Despite the late selling in stocks, one notable bright spot was Bear Stearns (BSC Quote), who said it would take a $1.2 billion writedown in the fourth quarter but also indicated that it might be getting a handle on the worst of its exposure to troubled debt. As a result, its shares climbed $2.58, or 2.6%, to $103.45.

Rival Merrill Lynch (MER Quote) confirmed it will install NYSE Euronext (NYX Quote) head John Thain as CEO. That sent the stock 1.8% higher to $57.98.

Bear's comments and Merrill's news, though, failed to bolster the financials. The KBW Bank Index was off 1.7%, and the Amex Financial Sub Index ended down 0.6%.

Another positive was the Labor Department's October producer price index, which showed a rise of just 0.1%. The core PPI, a number that excludes food and energy, was unchanged. Both readings were better than forecasts.

Ian Shepherdson, chief economist with High Frequency Economics, said the data suggest inflation ought not be a barrier to further Federal Reserve interest rate cuts.

"The headline was lifted entirely by food prices, which jumped 1.0%, while energy prices dipped," he said. "Higher food prices are passing through into the [consumer price index], but with wage gains slowing, this just means consumers' real incomes are being squeezed. [It] is not inflationary."

The CPI, arguably the more important of the two price reports, will be released Thursday.