Stocks started off February mixed as banks took a hit from worries about the so-called "bad bank" plan, while techs got a boost from anticipation that they will benefit from government spending on tech and telecom infrastructure.
The Dow Jones Industrial Average lost 64.11, or 0.8 percent, to close at 7,936.75, after logging the worst January on record that piled another heap of losses onto last year's carnage.
The S&P 500ended flat, while theNasdaq jumped 1.2 percent.
The buzz on the market floor was that traders don't think the government stimulus package will stimulate the economy.
"It's not going to produce a lot of jobs and will cost the taxpayer a lot of money," Art Cashin, director of floor operations at UBS, told CNBC.
Hugh Johnson, chairman and chief investment officer of Illington Advisors, agreed.
"The markets are sending a very defensive signal ... Right now, the answer is [that there's] not much evidence this is going to work," Johnson said.
But given all the uncertainty in the market, traders focused on sector and individual stock plays.
Financials were mostly lower amid worries that the so-called "bad bank" plan is faltering, with Bank of America, which would have a lot to gain from getting some of the Merrill load off its books, leading Dow decliners with a drop of 8.8 percent.
But Hartford Financial led the Nasdaq gainers, climbing 15 percent, after Barron's on Sunday wrote that the company is a "compelling buy" on expectations that it will rebound as the value of its bond holdings recovers.
Techs advanced, with Intel jumping 5.7 percent and Microsoft advancing 4.3 percent, as investors bet that techs may be among the early beneficiaries of government spending.
Applied Materials ticked higher after the chip-equipment maker warned it would post a quarterly lossamid charges related to restructuring, inventory and financial problems, and said sales would come in at the low end of its previously forecast range.
