Financials Bad Now -- Worse in September?

Mary Thompson is in for Bob Pisani Monday.

It was a "Meltdown Monday" on Wall Street today. People might pooh-pooh today's action because of the light volume, but it is hard not to be a bit awestruck at the breadth of the decline. All of the Dow Jones Industrial's 30 components fell, toward the close 472 of the S&P 500 Index were lower, and 97 of the Nasdaq 100.

The end result, a 241.81 point decline for the Dow, a 25.36 point slide for the S&P and a 49.12 point loss for the Nasdaq.

Why the decline? There were plenty of reasons cited, but the most common was concerns about the financials.

Keep in mind, until last autumn, this was a leading group among S&P 500 members. As banks and insurance companies work through balance sheet problems that have cropped up in the wake of the decline in the housing market and the resulting liquidity crisis, investors are looking for new leadership to emerge.

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• Forbes on Fannie, Freddie, Democrats and the Dollar

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Some might say energy and commodity stocks have taken firm hold of this mantle. But with a look back at the market action that followed the bursting of the tech bubble, one knows it takes a long time for investors to fall out of love with former star performers. Now reality is sinking in, meaning the problems at the nation's banks aren't going away tomorrow and are likely to be with us for a couple of more quarters at least.

So without the former leaders and without new leaders that don't look as long in the tooth as energy does, investors are moving to the sidelines.

Or at least they were today. Keep in mind when volume is light, the swings are sudden and swift. So, good news tomorrow might change the market's mind. Still, September is around the corner and historically, this is the toughest month for the stock market.

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CNBC's Financials in the News:

- Fannie Mae

- Freddie Mac

- Lehman Bros.

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