Stocks Start Week in Reverse

Updated from 4:18 p.m. EST

Stocks in the U.S. ended modestly lower Monday, as traders weighed a government plan to help homeowners against jarring remarks from the Federal Reserve on the subprime mortgage mess.

The Dow Jones Industrial Average spent time on both sides of the flat line before falling 57.15 points, or 0.43%, to 13,314.57. The S&P 500 briefly poked into positive territory but ultimately ended down 8.72 points, or 0.59%, to 1472.42. The Nasdaq Composite lost 23.83 points, or 0.9%, at 2637.13.

Stocks had earlier gained ground following comments from Treasury Secretary Henry Paulson, who confirmed that the federal government is working with mortgage lenders to create a plan that would essentially bail out consumers with subprime mortgages.

Paulson said that housing is still the biggest threat to the U.S. economy, and that "we will need an aggressive, systematic approach to fast-track able borrowers into a refinance or mortgage modification."

Those comments came after Boston Fed President Eric Rosengren expressed his concern over the subprime mortgage problem, saying before the opening bell that "the foreclosure crisis will get worse before it gets better, but our forecast is quite dependent on how far house prices fall."

He also said the "outlook for how much worse this problem could become depends critically on the outlook for the economy and the housing market. We are currently expecting the economy to grow well below potential for the next two quarters, before gradually improving over the course of next year."