U.S. stock indexes closed lower as a rally in financial shares lost steam late in trading, pushing down markets already pressured by falling tech shares, though the voracious selliing of last week didn't surface Monday.
The Dow Jones industrial average slid 55.19 points, or 0.42 percent, to end at 12,987.55. The Standard & Poor's 500 Index fell 14.52 points, or 1.00 percent, to finish at 1,439.18. The Nasdaq Composite Index tumbled 43.81 points, or 1.67 percent, to 2,584.13.
The Dow's finish was its first below 13,000 for since mid-August; the index is now 8 percent off its record closing high. The S&P 500 is about 8 percent lower than its record finish.
"What you're seeing today is just sort of a one-day lull," said John Massey, senior vice president and portfolio manager at AIG SunAmerica Asset Management. "I don't think the picture looks any better than it did before (third-quarter) earnings. If anything I think it looks worse, a little bleak."
Among the financial shares that gave back most or all of their gains from earlier in the day wereMerrill Lynch , Bank of America and JP Morgan . Countrywide Financial was unable to join in the bargain-hunting for bank stocks at all, as it remained dogged by a warning it issued late Friday against the possibility of a debilitating cut in its credit rating that would reduce it to junk status.
Citigroup, which recently accepted the resignation of former CEO Chuck Prince, continued to trade higher.
Consumer-oriented stocks, including retailers, also posted gains, with Wal-Mart Stores up a day before the world's largest retailer is due to post third-quarter results.
Trading was volatile and lighter than usual, with bond markets closed for Veterans Day and no major U.S. economic indicators scheduled.
The dollar rose sharply, reversing some of its recent losses as nervousness about credit-related losses at U.S. banks triggered a wave of risk reduction in light volume.
(Tracking the reaction to U.S. markets, CNBC.com will live-stream the opening of stock markets across Asia Monday evening.)
Techs Continue Slide
E-Trade Financial was one of the day's biggest losers as it plunged on a downgrade from Citi Investment Research, while EchoStar slid after it issued a warning about declining subscriber growth. Merrill Lynch, meanwhile, downgraded other tech firms including Microsoft, which slipped, and Oracle which gained.
Oil fell below $95 a barrel amid signs that the Organization of the Petroleum Exporting Countries would boost production, and shares fell at major energy producers including ExxonMobil , ConocoPhillips and Chevron .
International Business Machines took focus early in the trading day when it announced plans to buy fellow business intelligence software firm Cognos for $5 billion in cash.
But worries persisted about the state of the market, and another week of selling loomed, worrying analysts that the Dow had substantial room to fall before turning around.
"I would not be surprised if we saw (12,700) by the end of the week," said Barry Armstrong, a financial planner with Securities America Advisors. "I think it will remain volatile under the end of November."
Recently listed asset manager Blackstone Group reported a third-quarter loss and missed analyst estimates. Tyson Foods reported a fourth- quarter profit compared with a year-earlier loss as the company posted operating profits in all segments, but a dour forecast weighed on shares.
In other corporate news, Boeing won a tentative order from Dubai Aerospace Enterprise for 100 aircraft, worth around $13.7 billion, but that was dwarfed by an Airbus order by Emirates Airlines of up to $35 billion.