Hopes of back-to-back gains were erased midday Monday, as more problems in the financial sectors weighed heavily on the broad markets. The Dow Jones Industrial Average dropped 237.4 points (-1.8%), Standard & Poor's 500 index traded 33.5 points lower (-2.3%), and the Nasdaq decreased 55.6 points (-2.1%). Volume on the NYSE totaled 1.5 billion shares, and decliners beat advancers by a ratio of about 3:1.
Troubled lender Countrywide (-10.5%) was hit hard after it was made public Senator Chuck Schumer wants regulators to look closer at loans made by the Federal Home Loan Bank of Atlanta to Countrywide. HSBC (-2.6%) announced it plans to transfer two SIVs to its balance sheet, increasing assets by $45 billion, but does not expect the move to affect earnings. The Wall Street Journal reported potential buyers of E*Trade (-13.7%) are hesitant to aggressively bid for the company because of its mortgage exposure (full story). Citigroup (-3.2%) fell below $30/share, an important psychological level, for the first time in five years. CNBC reported the company was planning another round of massive lay-offs (full story). The US 10-year Treasury rallied 1-18/32 in price, pushing yields down to 3.81%, the lowest level in three years.
All sectors finished with losses Monday, with financials (-2.5%) falling the most. Crude fell $0.48 to $97.70 on news Saudi Arabia is increasing production. Newell Rubbermaid (-7.5%) announced it was lowering its sales targets for the 4th quarter and the full-year (full story). Sony (1.9%) was up on news that Dubai International Capital (DIC) made a "substantial" investment into the company (full story). Sears (-4.3%) bid $6.75/share in cash for Restoration Hardware (+0.14%), topping the previous bid made by a group led by the management at Restoration (full story). Philips Electronic (-2.0%) said it plans to purchase Genlyte (+50.7%) for about $2.7 billion (full story).
Consumer Confidence (10:00 AM) will be released Tuesday.
Commentary: Housing Market Tracker - Mortgage/Subprime-Related Stocks • U.S./Emerging Market Decoupling
Stocks to watch: PHG, GLYT, CFC, HSBC, ETFC, C, NWL, SHLD, RSTO, SNE