News Calendar: Alcoa's Up Next

The steel and iron industry was among the laggards thanks to an 11.2% drop in shares of Rio Tinto (RIO). The stock fell after reports it might be considering a multibillion-dollar rights issue.

(At 11:45 a.m. EDT)

Financials Crumbling on Bearish Research

Well, the stock market continues to live and die with the financial sector, and that trend doesn't look to change any time soon. The three major U.S. indices were down between 1.4% and 2.1%, pressured Monday by the slide in banks. Looks like traders aren't going to get that quiet, holiday-shortened week as a reprieve to the roller-coaster ride that appears will never stop.

After enjoying a 60% rally over the last month, the KBW Bank Index was giving back more than 4% and has fallen under the 30 level. The financial sector is reeling from a bearish report from Calyon Securities analyst Mike Mayo, who jumped to the firm recently from Deutsche Bank.

Mayo initiated coverage of Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM), Wells Fargo (WFC), Comerica (CMA) and PNC Financial Services (PNC) with underperform ratings.

Meanwhile, Mayo initiated sell ratings on U.S. Bancorp (USB), BB&T (BBT), Fifth Third Bancorp (FITB), KeyCorp (KEY) and SunTrust Banks (STI).

In his report, Mayo said a key implication is that loan losses should increase to levels that exceed the Great Depression. "While certain mortgage problems are farther along, other areas are likely to accelerate, reflecting a rolling recession by asset class," he wrote.

When Mayo left Deutsche Bank late last month, The Wall Street Journal said it was because he blamed the German bank for restricting his ability to speak freely about bank stocks.