Updated from 4:21 p.m. EDT
Stocks in New York pared their losses late in the day to close just modestly lower Monday, but the drop ended a streak of four consecutive wins for the major averages.
Dow Jones Industrial Average
gave up 41.74 points, or 0.5%, to 7975.85, and the
lost 7.02 points, or 0.8%, to 835.48. The
shed 15.16 points, or 0.9%, to 1606.71.
JP Morgan Chase
were the worst performers on the Dow, losing 4.6% and 3.7%, respectively.
went against the grain, adding 8.1% to $2.27.
The market was pressured even before the open of trading after a discouraging research report on the major U.S. banks and word that
bid to acquire
may have fallen apart.
The KBW Banking Index slid 3.8% after Calyon analyst Michael Mayo initiated coverage on several banks, rating 11 large firms as sell or underperform. Mayo, in a report titled "Seven Deadly Sins of Banking," said the recent run-up in bank stocks isn't being caused by actual conviction about the value of the shares, and he believes the underlying fundamentals haven't changed for the banks and loan losses will continue.
Among those trading lower,
fell 6.7% to $15.25, and
declined 8.1% to $12.70.
Though the financials were weak, it wasn't surprising nor necessarily a bad thing that the market was lower, says Michael James, managing director at Wedbush Morgan Securities.
"When you look at the magnitude of the move we've had in the course of the last month, you don't want to make too big a deal out of one day's pause. We still need to see how the next couple of days pan out to find out if the bulls are still in control and if the uptrend is still intact."
There hasn't been a break in the buying stampede over the past few weeks that's lasted more than a handful of sessions, writes Jeffrey Saut, chief investment strategist at Raymond James. But, he says, this is session 21 in the run-up, and the equity markets are very overbought. "Consequently, we are again cautious."
On one hand, another week or two like the last few could finally provide a positive signal that at least a short-term bottom is in, writes Paul Nolte, director of investments at Hinsdale Associates. "As of yet, the markets, even with a huge rally, have not made it above any recent peak in prices or in many of our indicators."
Still, it is "nowhere near certain" that a long-term bottom is in place, he says. "Looking back over the history of various indexes, the first bottom is not 'the' bottom, as the markets usually come back to visit those lows at least one more time before taking off."
The fallout of a tech deal also added to the uncertainty. IBM reportedly ended its offer to buy
this weekend after Sun withdrew IBM's status for exclusive negotiations. Talks were said to have been in the final stages for a $7 billion merger. Sun's shares fell 22.7% to $6.56, while IBM was off 0.7% to $101.56.
Elsewhere, a deadline for talks between
unions for its landline workers
to reach an agreement on a new contract expired Sunday without a resolution. Employees will continue to work under the expired contract for the time being, according to a statement. AT&T shares edged down 0.9% to $26.59.
is moving some of its work overseas. The company will pay $100 million over six years to
data-center services to India's HCL Technologies. Xerox said the move is not related to a restructuring announced last year that resulted in the elimination of 3,000 jobs. Shares declined 2.8% to $4.86.
In other news, Las Vegas-based
has hired Morgan Stanley to help it consider
, including the MGM Grand Detroit and the Biloxi Beau Rivage in Mississippi. MGM shares soared 18.9% to $5.53 on the report.
added 16% to $3.77 after the automaker said it rid itself of $9.9 billion in debt through
for $3.4 billion of unsecured nonconvertible debt securities, $4.3 billion of convertible notes and $2.2 billion in term debt.
Last, a week after the government pushed out
CEO Rick Wagoner, Treasury Secretary Tim Geithner said over the weekend that Washington may require
at banks that need "exceptional assistance" in the future.
As for commodities, crude oil fell $1.46 to settle at $51.05 a barrel, and gold dropped $24.50 to $872.80 an ounce. The dollar was just slightly stronger against the yen and weaker vs. the euro and pound.
Longer-dated Treasuries were falling, with the 10-year down 12/32 to yield 2.9% and the 30-year losing 20/32 and yielding 3.7%.
Stocks in Europe were lower, with the FTSE 100 in London and Dax in Frankfurt down 0.9% and 0.8%, respectively. Stocks in Asia, however, had a positive session, with the Nikkei and Hang Seng rising 1.2% and 3.1%.
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