Dow Recoils Late, Loses 127

U.S. stocks struggled Monday as investors remained concerned about the recovery's sustainability amid better-than-expected April existing-home sales. Gregg Greenberg has The Real Story.
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NEW YORK (

TheStreet

) -- Stocks deteriorated in the last few moments of trading and finished near their session lows Monday, weighed mostly by struggling financial stocks in the final minutes, as investors continued eyeing uncertainty out of Europe and absorbed better-than-expected

April existing-home sales though questioned the growth's sustainability.

After trading in a narrow range for much of the day, the

Dow Jones Industrial Average

tumbled 127 points, or 1.2%, to close at 10,067. The

S&P 500

lost 14 points, or 1.3%, to 1074 while the

Nasdaq

shed 15 points, or 0.7%, at 2214.

"I think we're looking at a little bit of a pullback from Friday's 20-minute rally," said Paul Nolte, managing director at Dearborn Partners, about the previous session's uptick in the final minutes of trading. "The market has been kind of on the defensive for much of the day.

"The news today was nothing fabulous, and the news from Europe was not that bad," he continued. "So the market is kind of trading on its own and digesting the events of the last couple of weeks."

The

euro was under pressure during the session as the market weighed news that the

Bank of Spain bailed out a regional savings bank.

Learn to Love a U.S. Default (Forbes)

Overseas on Monday, Hong Kong's Hang Seng rose 0.6% and Japan's Nikkei slipped 0.3%. The FTSE in London added 0.1%, and the DAX in Frankfurt fell by 0.4%.

UBS strategist Thomas Doerflinger, who regularly reports on client activity involving cash transactions, said that although U.S. clients recently reduced their pace of net selling, selling levels are still high.

"The difference came from hedge funds: while still responsible for most of the net selling, they reduced their level of net selling in the most recent four-week period," Doerflinger said, adding that while all sectors were impacted by the net selling for the third week in a row, energy and consumer stocks were hit the hardest.

Energy among the weakest sectors during Monday's session, although both sectors were trading in the red.

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The Economy

Existing-home sales jumped 7.6% to 5.77 million in April, according to a monthly report from the National Association of Realtors. April sales exceeded analysts' expectations for 5.65 million, according to

Briefing.com

and compared with a 7% increase in March.

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Company News

The transportation sector was seeing the strongest gains as

China Eastern Airlines

(CEA) - Get Report

topped the

New York Stock Exchange

with American depositary shares gaining 15.2%.

Energy and bank shares were under the most pressure during Monday's session, as the NYSE Arca Oil index declined 2.5%, the Philadelphia Oil Service Sector index dropped 4% and the KBW Bank Index fell 3.3%.

JPMorgan Chase

(JPM) - Get Report

,

Bank of America

(BAC) - Get Report

and

Kraft

(KFT)

were the biggest laggards on the Dow while

Home Depot

(HD) - Get Report

was the Dow's only positive performing stock.

Citi

(C) - Get Report

shares rose 0.8% on a Goldman Sachs upgrade to buy from neutral. Shares of

Wells Fargo

(WFC) - Get Report

, meanwhile, slipped 4.7% after Goldman cut its rating to neutral from buy.

Campbell Soup

(CPB) - Get Report

reported better-than-expected third-quarter earnings thanks to improved volume trends, productivity gains and favorable currency. Campbell Soup also reaffirmed its full-year guidance, though shares retreated 0.3%, or 10 cents, at $35.38.

IBM

(IBM) - Get Report

will acquire business-software maker

Sterling Commerce

from

AT&T

(T) - Get Report

for roughly $1.4 billion in cash.

Chinese solar module company

Yingli Green Energy

(YGE)

reported a first-quarter profit that missed analysts estimates by 2 cents, at 23 cents a share.

Sterling Financial

(STSA) - Get Report

will receive an investment of $139 million from private-equity firm Warburg Pincus to support the bank's recapitalization plan.

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Commodities and the Dollar

Crude oil for July delivery improved 17 cents to settle at $70.21 a barrel.

Elsewhere in commodity markets, the June

gold contract added $17.90 to settle at $1,194 an ounce.

The

dollar was trading higher against a basket of currencies, with the

dollar index up by 1.1%.

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>>The Economy

>>Company News

>>Treasuries

Treasuries

The benchmark 10-year Treasury rose 4/32, lowering the yield to 3.221%.

The two-year note added 1/32, pushing the yield down to 0.743%. The 30-year bond fell 5/32, strengthening the yield to 4.110%.

--Written by Melinda Peer and Sung Moss in New York

.

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