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.

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