Wall Street Can't Shake Losses

In corporate news, Sanford Bernstein downgraded Verizon (VZ Quote) and AT&T (T Quote) to market perform and cut their price targets by $5 and $8, respectively.

"We believe the telco stocks have come too far, too fast," wrote Bernstein Research analyst Craig Moffett. With fourth-quarter outperformance, the sector has traded as a defensive/staple, but the analyst says the sector should be viewed as cyclical. "To be sure, their businesses are more recession-resistant than most. But they will not emerge unscathed."

Bernstein analysts say the primary risk is to wireless -- they've cut their 2009 subscriber growth forecasts by roughly 1 million net additions for each Verizon and AT&T. "With Wireless now approaching saturation, and with incremental subscribers hard pressed by the recession, subscriber growth can be expected to slow sharply, in our view," they write. Verizon gave up 6.2% to $32.48; AT&T tripped 3.4% to $28.43.

In economic data, the Census Bureau said construction spending declined 0.6% in November from a month prior, vs. an expected 1.4% decrease. During the first 11 months of this year, construction spending amounted to $998.4 billion, 5.3% below the same period in 2007, according to the report.

Private construction fell 1.5% in November, with residential construction falling 4.2% but nonresidential construction revving up by 1.1%. Public construction increased by 1.4% with educational and highway construction both rising 1.3%.

Leading the global headlines over the weekend, Israel launched an offensive on the Gaza strip Saturday in response to continued rocket attacks by Hamas after a six-month ceasefire expired in December. Israeli forces had cut the Gaza Strip in half, circling Gaza city, by late Sunday.