Updated from 4:14 p.m. EST
Stocks in New York opened the week with steep losses Monday, putting the blue-chip
Dow Jones Industrial Average
at levels not seen since 1997, despite a comparatively good day for the beaten-down banking sector.
lost 250.89 points, or 3.4%, to 7114.78, and the S&P was off 26.72 points, or 3.5%, at 743.33. The
fell 53.51 points, or 3.7%, to 1387.72.
Despite a better-than-normal day for the large financials, the market didn't have much help otherwise. Word that a new round of government aid could be approaching for
, rather than a full-scale takeover of the institution that some investors had been fearing, lifted the company's shares 9.7% to $2.14.
The advance in
followed a report in
The Wall Street Journal
that Washington might convert its preferred shares in the bank to common equity.
While that would dilute the existing common stockholders, it appears to ensure that at least some interest in the company would remain privately held. Shares of Citi have been under extreme selling pressure in recent days as traders fretted that the common stock could be wiped out amid a government nationalization of troubled financial-services firms.
Fellow Dow stock
Bank of America
rose 3.2% to $3.91. Only BofA and Citi closed higher among the 30 stocks on the industrial average.
, which had been positive for part of the session, ended lower by 2% at $19.51.
was another drag on the session, falling 5.7% to a multiyear low at $8.85 on worries about its
Even though Citi and Bank of America were in the green, traders were still worried about the overall health of the financial sector and the economy, which has been in a recession for more than a year. Late in the day reports emerged that
might seek additional funds from the government and may be preparing to report a mammoth loss.
That news came just hours after the
, Federal Deposit Insurance Corp.,
and other regulators said explicit nationalization of the banking system isn't in the government's plans.
Last Friday, the White House issued a statement saying it supported a private banking system, which helped allay the fears that federal ownership was being considered.
Yet another battered name,
, ended flat, while an
for oil major
wasn't enough to keep its shares above the flat line.
Weakness in technology was a drag on the market from the morning on. Large-cap names
traded lower by between 4% and 6%.
The Philadelphia Stock Exchange Semiconductor Sector index was off 4.1%, and the Amex Computer Hardware index was worse by 5%.
Another weak spot was health insurance, where
all lost ground.
Meanwhile, markets overseas were mostly lower. Hong Kong's Hang Seng rose 3.8% to 13,175, but Tokyo's Nikkei surrendered 0.5% to 7376. In Europe, London's FTSE fell 1%, Frankfurt's Dax lost 2%, and the Paris Cac 40 slipped 0.8%.
Away from stocks, crude oil prices declined $1.59 to $38.44 a barrel. Gasoline futures decreased 3 cents to $1.04 a gallon. Gold was down about $7 to $995 an ounce.
On the fixed-income side, the 10-year note was up 9/32 in price, yielding 2.75%, and the 30-year bond was up 1-3/32, yielding 3.51%.