Stocks Close Lower as Housing Worries Hit Financial Shares
U.S. stocks fell on Monday as financial shares weakened on news that turmoil related to subprime home lending may have hit Germany's largest bank, while a strike at General Motors Corp renewed concerns about the economic outlook.
"People aren't convinced these financials are out of the water yet," said Todd Leone, head of listed trading at Cowen & Co. in New York. "The rate cut doesn't solve all of the problems."
The Federal Reserve cut benchmark interest rates last Tuesday by a half percentage point.
The Dow Jones industrial average was down 61.05 points, or 0.44 percent, at 13,759.14. The Standard & Poor's 500 Index was down 7.93 points, or 0.52 percent, at 1,517.82. The Nasdaq Composite Index was down 4.11 points, or 0.15 percent, at 2,667.11.
In other company-related news, thousands of United Auto Workers walked off the job at General Motors plants around the country Monday in the first nationwide strike against the U.S. auto industry since 1976.
UAW President Ron Gettelfinger said that job security was the top unresolved issue, adding that the talks did not stumble over a groundbreaking provision establishing a UAW-managed trust that will administer GM's retiree health care obligations. Gettelfinger complained about "one-sided negotiations."
Shares of AMR Corp.
Stocks reversed earlier gains as an advance in technology stocks lost steam. Technology shares gained as investors bet the recent cut in interest rates would keep the economy growing and spur business spending.
Shares of Microsoft rose, along with Apple , the maker of the iPhone, and Google
Earlier in the session, Apple hit a record of $149.85.
"The bullish thesis for technology is that you have the potential for a reignition of growth, and some of the names that have had big moves now may have an additional catalyst," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.
"The rate cut has prompted more institutional money to come into the market from the sidelines. People are buying stocks that have already demonstrated that things are going well."
Treasury prices finished mostly higher Monday, shaking off an early decline and benefiting from the downturn among stocks.
With no major economic data on tap for Monday, investors are likely to keep a close eye on the dollar, whose decline Bakhos said boosted the allure of U.S. equities.
The U.S. currency sunk to a record low against the euro for a third straight session Monday following the Fed's decision on Tuesday to cut interest rates by a hefty 50 basis points.