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Stocks Wilt as Morning Wears On

Oil prices tick ahead, and the dollar retreats against the euro.
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Updated from 9:17 a.m. EDT

Stocks were in a moderate slump Monday morning as traders monitored an uptick in the price of crude oil and a pullback in the dollar.


Dow Jones Industrial Average

was down 71 points to 11,589, and the

S&P 500

was off 6 points at 1292. The


was slipping 11.5 points to 2441.

In the commodities space, crude oil was adding 89 cents to $114.66, as investors attempted to assess supply risks related to a Gulf of Mexico-bound tropical storm. Gold was up $10.10 to $802.20.

Meanwhile, the dollar was beginning to soften after a week of solid gains against its major foreign counterparts. Treasury securities were gaining. The 10-year was up 4/32, yielding 3.82%, and the 30-year was adding 14/32 to yield 4.44%.

On the corporate side, Japanese bank

Mitsubishi UFG

has inked an agreement to buy California regional bank



. Mitsubishi already owns 65% of UnionBanCal shares and will pay $3.5 billion for the remainder. UnionBanCal is noted for having sidestepped the worst of the housing crisis.

Elsewhere in the financial sector,


reported that the government will probably help troubled mortgage companies

Fannie Mae



Freddie Mac


raise fresh capital at the expense of taxpayers and shareholders. Both stocks led the financial sector lower, each losing more than 10%.

The Wall Street Journal

also reported that brokerage

Lehman Brothers


could stand to lose $1.8 billion in the third quarter, adding further pressure to CEO Richard Fuld and raising the prospects that the company would need to raise more than the $6 billion in capital it amassed in June.

In the technology sphere, telecom service provider



reached a potential accord with two of its labor unions, Communications Workers of America and the International Brotherhood of Electrical Workers.

Elsewhere, video games developer

Electronic Arts


announced it would not extend the deadline on its $2 billion buyout offer for

Take-Two Interactive


. Electronic Arts agreed to meet with Take-Two's management, raising the possibility of a friendly acquisition. Take-Two shares were falling early.

As for earnings, mining company

BHP Billiton


announced rising full-year profit and raised its dividend. Retailer



announced a year-over-year slump in income but nonetheless bested the Street's estimates.

On foreign trading floors, the action was mixed. The FTSE in London was slightly higher, while the DAX in Frankfurt was losing ground. In Asia, Tokyo's Nikkei was up, while the Hang Seng in Hong Kong was trading lower.