AIG, Wal-Mart Knock Stock Market Lower

Gap (GPS Quote) and American Eagle (AEO Quote) had comparable-sales decreases that were on the soft side. The S&P Retail Index was down 2.1%.

Citigroup (C Quote) was another drag, giving back 6% after agreeing to a more than $7 billion settlement with state and federal authorities regarding probes into the auction-rate securities market.

Initial jobless claims also rattled traders, with the government saying 455,000 first-time filings for unemployment insurance were submitted last week. That was 30,000 more than predicted and up 7,000 from the prior week.

As for earnings, Toyota's (TM Quote) profits dropped roughly 28% owing to sluggish North American sales, while Sara Lee (SLE Quote) topped analysts' quarterly earnings estimates.

Outside the stock market, oil futures added $1.44 to $120.02 a barrel. The dollar improved against major currencies other than the yen.

Turning to the fixed-income side, Treasury prices were much stronger, with the 10-year note up 1-5/32, lowering the yield to 3.92%. The 30-year bond was climbing 2-6/32 to yield 4.55%.