Updated from 12:22 p.m. EDT
Stocks in New York opened to the upside Monday, but the early advance was short-lived, as investors ran away from the financials and contended with a continued rise in the price of crude oil.
Dow Jones Industrial Average
was recently up 11 points at 11,853, and the
was gaining 1 points to 1319. The
was off 9 points at 2397.
Financial-services firms were again having a rough time of it.
could be close to announcing another round of job cuts. Reports this weekend said Citi is about to lay off a large group of its investment bankers. The
reported that half of its planned 6,500 job cuts have been completed. Shares of Citi were losing 3%.
is also cutting staff in its mergers and acquisitions segment. Goldman was down 3%.
More broadly, the
Financial Select Sector SPDR
was off 2.7%. Along with Citi and Goldman, both components of the ETF, fellow holdings
Bank of America
were trading lower, as well.
Many investment banks and brokerages have been retooling in the wake of the credit crisis that began last year, and that has meant thousands of job cuts across the operations of some of the biggest names in the group.
Adding to the pain, Bank of America also announced it foresees a $3.5 billion writedown for
( MER) and $7 billion in writedowns for
Goldman Sachs also revised its rating for the financials, saying it had been wrong to upgrade the space less than two months ago. Goldman now encourages investors to "underweight" the space. Goldman issued a similar revision for the consumer discretionary sector.
Mark Giambrone, portfolio manager at Barrow Hanley, said today's action, with bearish news for the financials and rising energy and commodity prices, is a continuation of the same themes the market has been dealing with for months.
can't keep lowering interest rates in the face of an inflation threat, banks have a harder time recovering. "That portion of the story, in terms of getting better, is over," said Giambrone. "At this point, I think the market is assuming that the Fed is going to raise rates.
"One of the easiest things in the world right now is just to get out of the financials and hide in the commodities," he added. "I don't think much is different. Same thing, just a different day."
The Fed will begin a two-day policy meeting on Tuesday, and any decision it makes on rates will be announced Wednesday afternoon. Traders are anxiously awaiting the Fed's statement, which could offer clues about the future direction of rates.
was leading the Dow's decliners, tumbling 6%. GM, along with
, have been hammered in recent weeks on concerns about declining demand for their heavy trucks and difficulties in the vehicle finance market.
Some merger activity had briefly helped perk up the market at the open. One deal, which had been somewhat anticipated, will see trash haulers
( AW) acquired by rival
for roughly $6 billion.
In the agricultural space,
disclosed plans to buy high-fructose corn syrup distributor
( CPO) in a $4.4 billion deal. Bunge also lifted its forecast. The bullish news wasn't enough to keep Bunge shares from falling 11% in recent trading.
Elsewhere, Saudi Arabia said over the weekend that it would increase oil production if needed. The largest member of OPEC said it could lift output by 200,000 barrels a day for the rest of the year, but a number of analysts were looking for more aggressive action from the Saudis.
Recently, crude was up $2.02 to $137.38 a barrel. Gasoline prices continued their retreat, down to $4.072 a gallon from $4.073. Gold was down $18.20 at $885.50.
Treasury prices were increasing slightly. The 10-year note was recently unchanged in price, yielding 4.16%, and the 30-year tacked on 11/32 to yield 4.70%. The dollar was gaining ground against the euro, the yen and the pound. The dollar index, which tracks the U.S. currency against a basket of foreign counterparts, was up 0.6%.
In corporate news, drugstore
announced it improved its third-quarter profit from the year-ago quarter, but fell slightly short of analysts' earnings-per-share estimates.
( MOT) got dinged with a Piper Jaffray downgrade to sell from neutral. Shares fell were losing 7%.
Energy stocks were showing strength.
National Oilwell Varco
led the sector, gaining 5.9% on an RBC Capital Markets upgrade to sector perform from underperform.
, a specialty chemicals company, sued private equity firm Apollo Management for allegedly botching respective potential buyouts by Basell Holdings and Hexion Specialty Chemicals.
Overall breadth was bearish. Decliners outpaced advancers 2-to-1 on the
New York Stock Exchange
, with 520 million shares trading hands. On the Nasdaq, the decliners were winning by a similar margin on volume of 990 million shares.