Tech Stocks Taken Apart

Goldman Sachs (GS Quote) will post earnings on Tuesday, Morgan Stanley (MS Quote) is out on Wednesday, and Bear Stearns (BSC Quote) will be out on Thursday.

Several financials were under pressure after Citigroup cut its ratings for Capital One (COF Quote), Countrywide (CFC Quote), Radian Group (RDN Quote) and MGIC Investment (MTG Quote).

Citi also downgraded a host of banks, including Bank of America (BAC Quote), JPMorgan Chase (JPM Quote), Wachovia (WB Quote) and Wells Fargo (WFC Quote).

Meanwhile, CIBC World Markets downgraded Swiss bank UBS (UBS Quote) to sector underperform from sector perform. UBS was off $1.23, or 2.6%, to finish at $46.12.

One of the winners, though, was bond insurer Ambac Financial (ABK Quote), which rose 17% to $26.68 after Moody's affirmed the Aaa rating on its Ambac Assurance unit.

Still, the NYSE Financial Sector Index was off 1.7%, the Nasdaq Financial 100 shed 1.2%, and the Amex Financial Sub Index was down 1.1%.

Among the few gainers, the Philadelphia Housing Sector Index edged up 0.1%.

"Technically, the market is very close to the middle of the broader trading range for this year," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "High inflation, a weakening growth picture and high energy prices are favoring the bears. There is still a chance that bulls make a run at it, but it looks as though we're starting this week on our heels."

Overseas markets fell hard as losses from Friday's U.S. session lingered. In Asia, Hong Kong's Hang Seng dropped 3.5%, and Japan's Nikkei 225 shed 1.7%. In Europe, London's FTSE 100 slid 1.9%, and Germany's Xetra Dax was down 1.6%.