Wall Street Falls Hard

A slight bit of good news came from the Conference Board, whose December consumer confidence index rose to 88.6 from a revised 87.8 in November. Economists anticipated a slight decline to 87.

"There's been a whole series of bad news coming out, and given thin holiday volume, it's easy to push the market down," said Edgar Peters, chief investment strategist with Pan Agora. "There's a bad negative tone as the economic data are weak, but isn't weak enough to ensure a [Federal Reserve] rate cut. It's simply a buyer's strike today."

Financials were in the spotlight after Goldman Sachs increased its writedown projections for Citigroup (C Quote), Merrill Lynch (MER Quote) and JPMorgan Chase (JPM Quote). The firm now expects a combined $33.6 billion in fourth-quarter writedowns to be announced.

Citigroup finished down 2.9%, Merrill was off 2.5%, and JPMorgan shed 2.9%. Subsector indices retreated, with the Amex Securities Broker/Dealer Index falling 2.1% and the NYSE Financial Sector Index decreasing 1.6%.

Elsewhere, Fitch Ratings said it has placed the credit ratings for residential mortgage-backed securities backed by bond insurers on watch for a possible downgrade.

Among those that could be affected are 87 securities insured by MBIA (MBI Quote), 64 by Ambac Financial (ABK Quote) and 19 by Security Capital Assurance (SCA Quote). MBIA was 0.7% higher, while Ambac and Security Capital gave up ground.