Updated from 4:19 p.m. EDT
Stocks in the U.S. closed lower after a choppy session Monday as selling in the financial sector and a drop in energy shares sent the major indices into the red.
Dow Jones Industrial Average
lost 56.58 points, or 0.5%, at 11,231.96, and the
fell 10.59 points to 1252.31. The
held up the best, slipping 2.06 points to 2243.32.
For the major averages, the day began with a rally, but the upward move was halted, and by the midpoint stocks were well into negative territory. The market then rebounded late before finally settling lower.
Government-sponsored mortgage buyers
were two of the hardest hit on Wall Street, both falling more than 15% after Lehman Brothers said new accounting requirements might force them to raise more capital.
The downturn was also evident in the broader group. The NYSE Financial Sector index slid 2.4%, and the Amex Securities Broker/Dealer index slumped 2.7%. The KBW Bank index was down 3.7%.
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Among individual Dow stocks,
Bank of America
lost 3.9%, and
was off 2.5%.
Weakness in energy shares also helped to drive the overall market lower. As oil futures tumbled nearly $4 a barrel to $141.37, influential stocks in the group struggled.
, fellow industrials, each shed more than 1%.
Domestic shares hadn't traded since last Thursday, and that was a half day. The market was closed Friday for the Independence Day holiday. As the new week got underway, investors were greeted with a host of merger news, and the dealmaking appeared to help brighten the mood before sellers asserted themselves at midsession.
The biggest transaction will see Germany's Fresenius, a seller of intravenous drugs, buy
for roughly $3.7 billion.
Also, China Oilfield Services, a unit of
, is set to pay $2.5 billion for Norway's Awilco Offshore.
Back in the U.S., the directors of
could be in for a fight to keep their jobs after Belgium's InBev, which is trying to take over the Budweiser maker for $46 billion, said it would try to replace the board.
On the friendlier side,
NBC Universal division is being joined by
and Bain Capital to purchase The Weather Channel. Terms of the acquisition weren't released, but reports put the value at around $3.5 billion.
Unable to prop up the tech sector was
, whose shares advanced nearly 12% on word that activist investor Carl Icahn has talked with
CEO Steve Ballmer about renewing an effort to acquire the Internet portal if a new board is installed.
, whose shares have been trading at multidecade lows amid worries about its financial health, may be close to firing thousands of white-collar workers, according to a published report.
The Wall Street Journal
also said GM might part ways with or end additional brands.
Away from equities, Treasury prices were higher, with the 10-year note up 19/32 in price, yielding 3.90%, and the 30-year bond rising 26/32 to yield 4.48%. The dollar was rising against the yen, the euro and the pound.
Overseas, most major markets were stronger. Tokyo's Nikkei added 0.9% to 13,360, and Hong Kong's Hang Seng jumped 2.3% to 21,913. In Europe, London's FTSE, Frankfurt's Dax and the Paris Cac were better by at least 1.8%.
This article was written by a staff member of TheStreet.com.