U.S. Stocks Fall As Financials Woes Return
NEW YORK (MarketWatch) -- Stocks fell on Monday, with worries about ailing financials rekindled by several media reports, while a turn lower in crude-oil prices failed to provide much momentum, instead shaving off earlier gains in the energy sector.
"We believe that a sustained uptrend in stocks will require additional good news from both the credit and energy markets," said Bob Doll, chairman of BlackRock, in his weekly investment letter.
The Dow Jones Industrial Average fell 87 points, or 0.5%, to 11,573, with 19 of its 30 components falling. The benchmark index was pulled lower by General Motors Corp. , AIG and Hewlett Packard .
The Dow's other financial stocks -- American Express , Bank of America , Citigroup and J.P. Morgan Chase -- each lost more than 2%.
Financial shares gave up some of their strong gains from Friday. Lehman Brothers lost 2% after The Wall Street Journal said it could lose $1.8 billion during the quarter.
Separately, newsweekly Barron's said it is growing more likely that the U.S. government will recapitalize Fannie Mae and Freddie Mac , wiping out investors.
Both Fannie and Freddie each lost more than 13%.
U.S. stocks ended mostly higher Friday as bond insurers Ambac Financial Group and MBIA Inc. had their credit ratings affirmed and as crude-oil futures continued their decline.
S&P, Nasdaq push lower
The S&P 500 index lost 8 points to 1,289, while the Nasdaq Composite dipped 14 points to 2,438.
The financial sector led the way down on the S&P 500, with the sector losing 1.6%, followed by consumer discretionary, off 1%, and information technology, down 1%.
The energy sector followed crude-oil prices lower, as the threat of Tropical Storm Fay hitting oil installations in the Gulf of Mexico faded and while concerns of lower demand returned.
September crude was last down 97 cents at $112.80 a barrel on the New York Mercantile Exchange retreating from an earlier high above $115.
The U.S. dollar was broadly steady after strong gains in the past couple of weeks and ahead of the latest data on housing, due later in the session, and inflation data due Tuesday.
Mining bucks the trend
Mining giant BHP Billiton said Monday it earned more than $15 billion in the year ended June 30 and that the impact of weakness from developed markets has been "minimal." Net profit for the period climbed 15% to $15.39 billion.
Shares in the group rose 0.5%, with other mining stocks also climbing.
In political news, Pakistan's President Pervez Musharraf said Monday that he will step down as the nation's leader amid a growing threat of impeachment.
Separately, in the financial sector, Mitsubishi UFJ Financial said it has sweetened a bid to acquired the 34.6% stake it doesn't hold in UnionBanCal Corp. to $3.5 billion from $3.0 billion and that the California-based lender has accepted it.
Shares in Hershey Co. fell 10% after the group lowered its 2008 earnings outlook late Friday and said it would raise wholesale prices by around 11% to offset higher costs.
Among other companies in focus, Lowe's reported a 4.5% drop in its earnings per share to 64 cents but still topped the consensus forecast of 56 cents, with sales also beating expectations.
By Nick Godt