Updated from 9:07 a.m. EDT
Stocks on Wall Street followed Monday's strong rally with an open to the downside Tuesday as traders digested the government's takeover of mortgage giants
Fannie Mae
( FNM) and
Freddie Mac
( FRE).
The
Dow Jones Industrial Average
lost 26 points to 11,484, and the
S&P 500
fell 5.6 points to 1262. The
Nasdaq
dropped 4 points to 2266.
On Monday, the major indices finished with solid gains following the government takeover of Fannie and Freddie. The two companies have been at the epicenter of the housing and credit crises, and questions about their solvency had contributed to worries about the entire financial-services industry.
After that day's close, a
regulatory filing showed Michael Dell
, CEO of PC maker
Dell
(DELL) - Get Report
, bought $100 million in the company's stock last week.
Ahead of the new day's trading,
Dow Jones Newswires
reported that South Korea Development bank, which had earlier been rumored ready to buy a stake in
Lehman Brothers
( LEH), has ended talks with the struggling brokerage.
Meanwhile, mining company
Sasol
(SSL) - Get Report
reported full-year profit rose 32% from a year ago. The company also said it expects continued growth in the year ahead.
Marius Kloppers, CEO of fellow miner
BHP Billiton
(BHP) - Get Report
, said that slowing global demand for commodities will bring shareholders of
Rio Tinto
( RTP) to support BHP's hostile bid for the company.
Several stocks could be ready to move following analyst actions. Stifel Nicolaus downgraded banking companies
TCF Financial
(TCB)
and
BB&T
(BBT) - Get Report
to hold from buy and to sell from hold, respectively.
Wachovia
(WB) - Get Report
also took a hit from Merrill Lynch, which cut the bank to underperform from neutral.
Merrill also took consumer conglomerate
Procter & Gamble
(PG) - Get Report
down a peg, to neutral from outperform, saying the stock trades at an unjustified premium.
Homebuilders
Pulte Home
(PHM) - Get Report
and
KB Home
(KBH) - Get Report
both got downgraded at Credit Suisse to neutral from outperform.
As for economic data, a read on July pending-home sales, as well as the Census Bureau's look at wholesale inventories, are expected to be released Tuesday morning.
Looking at commodities, the price of crude oil was down $1.78 to $104.56 a barrel. Gold was shedding $10.40 to $792.10 an ounce.
Prices of longer-dated U.S. Treasury securities were rising slightly. The 10-year was up 3/32 to yield 3.66%, and the 30-year was adding 16/32, yielding 4.24%.
Overseas, European indices, such as London's FTSE and Frankfurt's Dax, were mainly trading higher. In Asia, the Nikkei in Japan and the Hang Seng in Hong Kong lost ground.
