Stocks Start on a Down Note - TheStreet

Updated from 7:55 a.m. EDT

As traders rang in the third quarter, stocks started their day with a hot cup of "sell" Tuesday amid rising oil prices, weakness in the dollar and soft European markets.

The

Dow Jones Industrial Average

opened down 92 points at 11,258, and the

S&P 500

gave up 11 points at 1269. The

Nasdaq

was down 20 points at 2273.

Part of the problem for stocks was a familiar foe -- crude oil. Recently, oil was up $2.78 to $142.78 a barrel on concern that Israel would bomb Iran over its nuclear program, causing supply disruptions. Gold was adding $10 to $938.30.

On the corporate front, several financial firms were working to improve or eliminate their exposure to the housing market.

Wachovia

(WB) - Get Report

said it would stop offering its controversial Pick-A-Payment mortgages.

Meanwhile,

CIT Group

(CIT) - Get Report

announced it would be selling its home lending business to Lone Star Funds for $1.5 billion in cash and $4.4 billion in debt. The company said it will also get rid of its manufactured housing portfolio to Vanderbilt Mortgage and Finance. CIT said it was seeking to eliminate uncertainty caused by exposure to the housing market.

In response to its own credit crunch - related woes, Swiss bank

UBS

(UBS) - Get Report

announced

the resignation of four directors and new corporate governance

. The new structure will draw a clearer line between the responsibilities of the board and those of senior management.

Traders will also be monitoring

Lehman Brothers

( LEH), which sold off 11% Monday on speculation that the bank may be forced to sell itself at a discount.

Several analyst actions ahead of the open could send stocks moving.

A cloud of negativity persisted in the financial services sector, as

JPMorgan Chase

(JPM) - Get Report

suffered a Fox Pitt downgrade to in line from outperform. Jefferies and Friedman Billings both cut their price targets for

Legg Mason

(LM) - Get Report

.

On the other hand, Citigroup initiated bullish coverage on the oil services sector, slapping a hold sticker on

Baker Hughes

(BHI)

and

Smith International

( SII), and putting a buy rating on

Schlumberger

(SLB) - Get Report

,

National Oilwell Varco

(NOV) - Get Report

and

Halliburton

(HAL) - Get Report

.

JPMorgan analysts offered positive predictions for media plays, assigning overweight status to

Outdoor Channel

(OUTD)

,

Cablevision

(CVC)

and

Comcast

(CMCSA) - Get Report

as well as neutral ratings on

EarthLink

(ELNK)

and

Charter Communications

(CHTR) - Get Report

.

Meanwhile, by-mail DVD rental

Netflix

(NFLX) - Get Report

got bumped to hold from underperform by Needham.

In the retail and health space,

MedcoHealth

(MHS)

,

CVS Caremark

(CVS) - Get Report

and

Express Scripts

(ESRX)

are merging their prescription network with a group of retailers, including

Wal-Mart

(WMT) - Get Report

. Parties to the deal expect the move to accelerate the transfer to electronic prescriptions from paper.

In the realm of economic data, investors will take a look at June auto and truck sales numbers, as well as May construction spending. They'll be examining the June ISM index, which offers nationwide insight into the health of the manufacturing sector, even more closely.

Treasury prices were higher. The 10-year note was tacking on 13/32, yielding 3.92%, and the 30-year was up 19/32 to yield 4.49%. The dollar was weaker against the euro, the yen and the pound.

Abroad, markets were taking a hit. All the major European exchanges, including London's FTSE, Frankfurt's Dax and the Paris Cac were down at least 1.8%. In Asia, Japan's Nikkei was off slightly, while Hong Kong's Hang Seng was ticking higher.