Updated from 8:34 a.m. EDT

(At 4:11 p.m. EDT)

Market Falls With Bank Stocks

Monday was only the first day of one of the busiest weeks this earnings reporting season, but it may be hard for traders to put today's losses behind them. It can't feel good to relinquish the 8000 threshold on the Dow Jones Industrial Average.

Many traders were optimistic about how the financial sector performed last quarter, and there really haven't been any major disappointments in terms of actual earnings so far. The winning streak has included JPMorgan Chase ( JPM), Goldman Sachs ( GS), Citigroup ( C), BB&T ( BBT) and, most recently, Bank of America ( BAC).

But as I pointed out on Friday and earlier today, rising defaults remain a major issue for banks and investors. For example, Bank of America shares plummeted 23% Monday due to an increase in its loan-loss provisions.

Does this really come as a surprise to everyone? Nearly every market strategist I've spoken with reiterates the same points. Housing problems show no sign of abating, credit problems persist, and people are still grappling with debt. I guess I'd be more surprised if banks weren't increasing these credit reserves.

Regardless, Monday's session is in the books and now traders have to move on to the next batch of earnings. Tuesday will bring earnings reports from other financial institutions, including Bank of New York Mellon ( BK), U.S. Bancorp ( USB), Capital One ( COF), KeyCorp ( KEY) and M&T Bank ( MTB), among others.

Before that, though, investors were sifting through results delivered after Monday's closing bell. Dow component IBM ( IBM) exceeded Wall Street's forecast with earnings of $1.70 a share, although revenue was lighter than expected. The company also reaffirmed its 2009 guidance for earnings of at least $9.20 a share, compared with current forecasts of $9.03 a share.

IBM, which usually dazzles investors with its earnings report, was trading down 3.1% in late trading on the revenue miss.

Meanwhile, Texas Instruments ( TXN) shares traded higher by more than 4% in the after-hours session. The chipmaker reported first-quarter earnings of 7 cents a share, excluding items, compared with the Thomson Reuters average estimate for a loss of 3 cents a share. Revenue of $2.09 billion was also better than analysts expected.

Tuesday's Earnings Lineup

The pace of earnings releases picks up on Tuesday, with several key names set to report. They include Dow components Caterpillar ( CAT), DuPont ( DD), Coca-Cola ( KO) and Merck ( MRK).

Additionally, Coach ( COH), UnitedHealth ( UNH), Lockheed Martin ( LMT), Delta Air Lines ( DAL) and New York Times ( NYT) are due to report before the start of trading.

After Tuesday's close, Yahoo! ( YHOO), Advanced Micro Devices ( AMD) and Broadcom ( BRCM), among others, will report quarterly results.

(At 7:49 a.m. EDT)

Earnings Recap

It looks like no matter what the banks say about the first quarter, the loan-loss provisions prove ultimately what matter.

Shares of Bank of America ( BAC) were sliding 8% in Monday's premarket session even after reporting a better-than-expected profit of 44 cents a share, joining both Citigroup ( C) and JPMorgan Chase ( JPM) in beating Wall Street's expectations for the first quarter.

But also like JPMorgan and Citigroup, Bank of America recorded a $13.38 billion loan-loss provision, more than doubling from a year ago. On Friday, Citigroup said credit costs jumped 76% from a year ago to $10.3 billion, and JPMorgan said that its own credit costs amounted to $10.1 billion in the first quarter, up significantly from a year ago.

Of course, all three banks have rallied strong since the beginning of March. BofA shares have jumped 99% from the end of February, so giving back 8% isn't the end of the world.

Several other companies that reported quarterly earnings early Monday also topped profit expectations. Eaton ( ETN), Eli Lilly ( LLY), Halliburton ( HAL), Hasbro ( HAS) and PepsiCo ( PEP) all exceeded earnings per share targets.

However, all of those names (with the exception of Eli Lilly) were trading lower in premarket trading.

Things will get even crazier after the close of trading Monday, when Dow component IBM ( IBM), Texas Instruments ( TXN), Boston Scientific ( BSX), and many others will post their respective results.

TARP Repayment Restrictions

A report in The Financial Times said that banks will be allowed to repay TARP funds only after a test to determine whether it is in the best interest of taxpayers, citing a senior U.S. official.

In other government news, the New York Times is reporting that the White House and Treasury Department may convert existing government loans in the nation's 19 biggest banks into common stock in order to make TARP funds last a little longer.

It seems investors are very concerned about the fact that the government believes it would not be able to secure any more funds from Congress, knocking futures down early Monday.

Oracle Nabs Sun

Sun Microsystems ( JAVA) was surging nearly 40% on news that Oracle ( ORCL) would buy the networking equipment maker for $7.4 billion in cash. At $9.50 a share, the deal values Sun at a 42% premium from its closing price on Friday.

Personally, I'm glad the drama between IBM and Sun won't stretch out for an interminable amount of time like the Microsoft ( MSFT) and Yahoo! ( YHOO) snafu. But with IBM set to report earnings after Monday's close, the news this morning will surely be mentioned on the conference call.

In other deal news, GlaxoSmithKline ( GSK) will buy Stiefel Laboratories for up to $3.6 billion. Meanwhile, PepsiCo has offered about $6 billion in cash and stock to buy out other shareholders of Pepsi Bottling Group ( PBG)and PepsiAmericas ( PAS).

Economic Data

The economic calendar is pretty quiet on Monday, as the March read on leading economic indicators is the lone report due out.

More from Investing

Bitcoin Today: Prices Plummet Below $8,000 in Market Downturn

Bitcoin Today: Prices Plummet Below $8,000 in Market Downturn

Why HP Enterprise's Stock Plunged After It Beat Earnings

Why HP Enterprise's Stock Plunged After It Beat Earnings

Has Wall Street Completely Lost Its Mind on General Electric?

Has Wall Street Completely Lost Its Mind on General Electric?

3 Must Reads on the Market From TheStreet's Top Columnists

3 Must Reads on the Market From TheStreet's Top Columnists

Did Trump Just Torpedo the Stock Market Again?

Did Trump Just Torpedo the Stock Market Again?