U.S. Stocks Erase Gains to Close With Losses

Wachovia Capital Markets, on the other hand, issued a bearish forecast for investment banks Lehman, Goldman Sachs (GS Quote) and Morgan Stanley (MS Quote). Wachovia cited seasonality, investor trepidation and declining valuations in equities as well as fixed-income markets as it reduced earnings estimates on the three brokerages. Goldman climbed 0.8% to $165.32, and Morgan Stanley was up 1.2% to $41.30.

Fellow financial-sector member Bank of America (BAC Quote) saw shares rise on a Goldman Sachs buy recommendation. Shares jumped 4.8% to $32.63.

Airline manufacturer Boeing (BA Quote) has been unable to reach an agreement with its largest union over a new labor contract, raising the chances of a strike by the International Association of Machinists and Aerospace Workers. Boeing shares ticked up 0.5% to $65.87.

Equipment maker Deere (DE Quote) announced it would close its factory in Welland, Ontario, a move that will result in 800 job cuts. Shares lost 2.6% to $68.71.

Away from stocks, longer-dated U.S. Treasury securities were ticking upward. The 10-year note was up 21/32 to yield 3.73%, and the 30-year was climbing 1-6/32, yielding 4.35%. The dollar was rising sharply against the euro, yen and pound. The dollar index, which tracks the dollar against a basket of foreign currencies, was up 0.6% at 78.077.

Turning to the day's economic data, the U.S. Census Bureau's look at July construction spending showed a 0.6% decline for July, down from a 0.3% increase in June and a wider decline than the 0.4% economists were expecting. The Institute for Supply Management's August manufacturing index registered 49.9, vs. estimates for a read of 50.

Overseas, European indices were looking strong, as the FTSE in London and the Dax in Frankfurt posted gains. In Asia, Japan's Nikkei was dropping, while Hong Kong's Hang Seng was slightly higher.

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