Stocks Dig Deeper Into Red

Updated from 2:01 p.m. EDT

Stocks in New York hit fresh session lows Monday afternoon, as traders continued to assess the Treasury Department's massive weekend bailout plan for financial firms. Money flowed into crude-oil futures, prompting a sharp spike in prices.

The Dow Jones Industrial Average shed 256 points to 11,132, and the S&P 500 slipped 33 points to 1222. The Nasdaq gave back 64 points to 2210.

On Friday, the three major indices finished substantially higher. Financials led the rally after the Securities and Exchange Commission temporarily banned short-selling of 799 stocks in the sector. The Treasury announced over the weekend that it would iron out a plan to provide hundreds of billions of dollars to U.S. banks and brokerages to try to avert further damage from the credit crisis.

The New York Stock Exchange on Monday extended the short-selling ban to 30 more companies that have significant financial operations. The list includes General Motors (GM Quote) and General Electric (GE Quote).

The short-selling ban helped unwind the buy-commodities, sell-financials trade, Paul Nolte, director of investments at Hinsdale Associates, wrote in an email Monday. Friday's rally was largely due to a recovery from very low levels and illustrates recent market volatility. "As a result, it is hard to take the movements ... as much more than a bounce from severely depressed levels," he wrote.

Over the weekend, the Treasury Department drafted a plan to lift as much as $700 billion in bad debt from financial-sector balance sheets.

"Some of the tranches of these [securities] are radioactive," said Jack Ablin, chief investment officer at Harris Private Bank. However, some of the less-risky securities do have value, he said. He said that the $30.6 million in mortgage-backed bonds Merrill Lynch sold to Lone Star in July were actually very solid.