Stocks Dig Deeper Into the Red

Johnson also pointed out that many traders are away on vacation this week, which makes it difficult for the market to find direction. "It's going to be a trendless and volatile week, and very news-sensitive," he said.

Elsewhere in the financials, Fitch Ratings said insurance company and Dow member AIG (AIG Quote) may be set for a credit-rating downgrade as the agency continues to assess its business. Credit Suisse piled on, lowering earnings estimates for the company.

Along with AIG, financial firms JPMorgan (JPM Quote) and Bank of America (BAC Quote) were dragging the Dow lower. None of the index's 30 components was marking gains.

Morgan Stanley also predicted that further writedowns stemming from the credit crunch and weakened earnings from the economic slowdowns would hurt the S&P 500's performance.

Concerns were exacerbated by the closure of Columbian Bank of Kansas. On Friday, the Federal Deposit Insurance Corp and Kansas regulators seized the bank. Columbian, which had $752 million in assets and $622 million in deposits as of June 30, is the ninth bank to fail in 2008.

Among analyst actions, Citigroup cut its rating on Cablevision (CVC Quote) to sell from buy on worries that the company's resilience against FiOS technology will be hard to maintain.

Meanwhile, Broadcom (BRCM Quote) agreed to buy the Advanced Micro Devices' (AMD Quote) digital TV segment for $192.8 million in cash.

In commodities, crude oil was up 17 cents to $114.76 a barrel, and the price of gasoline was at $3.68 a gallon, meaning it's now down 30 cents from a month ago. Gold was losing $6.40 to $827.10.