Stocks closed lower—even though oil fell to $113 a barrel—as a fresh round of warnings about banking troubles squelched the market's week-long rally.
Major indexes suffered losses as some of Wall Street's largest banks were hit with downgrades and writedowns.
Stocks traded in a tight range through most of the day before breaking lower in the last hour of trading. Financials dominated trading, with the bank losses running too deep to let stocks rise, desite another down day for oil.
"All of a sudden we have echoes of financial concerns," Art Cashin, director of floor operations at UBS, said on CNBC. "That's why so far we haven't been able to get the benefit of weaker oil."
JP Morgan plunged on news the bank incurred losses of about $1.5 billion for the quarter to date, as it continued to be hurt by wider credit spreads, lower levels of liquidity, as well as the disruption in the credit and mortgage markets.
Goldman Sachs shares also were among the biggest casualties after a downgrade from Deutsche Bank as well as Oppenheimer analyst Meredith Whitney, who cut the third-quarter share view to $2.15 from $3.54 and rated the stock "market perform."
Citigroup also warned that Bank of America may cut its dividend later this year or early in 2009.