Updated from 4:20 p.m. EDTThe major indices in New York fell as much as 1% Monday as markets, initially unnerved by growing reports of swine flu, rose off their lows only to succumb to light selling in the afternoon. The Dow Jones Industrial Average lost 51.29 points, or 0.6%, to 8025. The S&P 500 gave up 8.72 points, or 1%, to 857.51, and the Nasdaq fell 14.88 points, or 0.9%, to 1679.41. All three had been higher for a time. The Dow has only had two positive starts to a week in 2009. The strongest performer on the index, General Motors ( GM), rose 20.7% to $2.04 on new measures to qualify it for more government aid. The automaker said it will cut thousands more U.S. factory jobs by next year, phase out its Pontiac brand, and exchange some of its debt.
A spokesman for the World Health Organization said the virus was spreading quickly in Mexico and the southern U.S. and has the potential to become a pandemic and a global threat. The outbreak centered in Mexico, where it is suspected in more than 100 deaths. The U.S., which has confirmed 40 cases, declared it a health emergency. Swiss drug company Roche said it has 3 million units of Tamiflu ready to deliver, and it can get the treatment to any country affected within 24 hours of notification. Shares of Gilead Sciences ( GILD), which develops the drug, rose 3.8% to $47.53. GlaxoSmithKline ( GSK), the maker of another flu treatment, gained 7.6% to $31.56. Hotels, airlines and cruise operators were under pressure as investors worried the flu would hinder tourism and travel. Continental Airlines ( CAL) and Southwest Airlines ( LUV) fell 16.4% and 9.4%, respectively. Marriot International ( MAR) lost 5.1% to $21.17, and Royal Caribbean Cruises ( RCL), which was also downgraded by Credit Suisse, dropped 16.3% to $12.10. In other news, former Merrill Lynch CEO John Thain said he was unfairly blamed by Bank of America's ( BAC) CEO Ken Lewis for controversial decisions, such as billions in early bonuses that were given out as the company faced massive losses. Banks underperformed the market, with the KBW Bank Index losing 4.9%. BofA and JP Morgan Chase ( JPM) gave up 1.9% and 1.8%, respectively, after briefly visiting positive territory early on. Citigroup ( C) shares lost 3.8% to $3.07, and Wells Fargo shares dropped 5.1% to $20.30. Meanwhile, a string of earnings continued as Corning ( GLW) said its profit declined by a whopping 99%, but Wall Street expected worse. Shares rose 3.3% to $15.84.
Humana ( HUM) shares rose 6.9% to $29.25 after it reported first-quarter earnings that topped its internal guidance and also raised its full-year earnings guidance. Commodities were under pressure. Oil fell $1.41 to settle at $50.14 a barrel, and gold lost $5.90 to $908.20 an ounce. The dollar was recently stronger against the yen, but weaker vs. the pound and euro. Longer-dated Treasuries were recently rising. The 10-year was adding 22/32, yielding 2.9%, while the 30-year was gaining 28/32 to yield 3.8%. Results of the Treasury's $40 billion auction of 2-year notes on Monday were "fairly good but not as strong as the previous two 2-year note auctions," wrote Tony Crescenzi, chief bond strategist at Miller Tabak, on his RealMoney.com blog. The Treasury will sell $35 billion of 5-year notes on Tuesday and $26 billion of 7-year notes on Wednesday.