Stocks erased all of their gains Monday after an early surge due to a better-than-expected manufacturing report. Financials and techs led the decline.
By early afternoon, the Dow was flat and the Nasdaq was in the red. Earlier, the Dow was up more than 140 points after a report showed manufacturing expanded more than expected last month.
Citigroup dropped below $4 a share around midday, the first time it's been there since mid-August. Bank of America went from the top of the Dow pack to the bottom.
Traders said it was one-two punch for finanicals: It was in part Citi's drop below $4 but also cautious testimony from Jon Greenlee, director of the Fed's Division of Banking Supervision and Regulation, to a House panel.
1) "Poor loan quality, subpar earnings, and uncertainty about future conditions raise questions about capital adequacy for some institutions," Greenlee said.
AT&T and Intel also dragged on the Dow as techs were weak after a report showed chip sales rose in the third quarter but revenue remains below year-ago levels.
Stocks got off with a surge this morning after the ISM reported its gauge of manufacturing activity in the U.S. came in at 55.7 in October, the thrid straight month of growth and the highest reading since April 2006. Anything above 50 indicates expansion. Economists had expected the gauge to rise to 53.
The encouraging reading on U.S. manufacturing came after three reports from around the globe showed an improvement in manufacturing: First, a report showed China's manufacturing sector expanded at its fastest pace in 18 monthsin October amid rising demand from both overseas and at home. Then, a report showed factory activity in the euro zone expanded for the first time in 17 months and also picked up in the U.K.
Among the other U.S. economic data this morning: Pending-home sales rose to their highest level in nearly three yearsin September, boosted by the first-time homebuyers tax credit. Also for September, construction spending rose 0.8 percent.
The market rebound came after Friday, when the Dow and S&P 500 experienced their biggest one-day percentage dropssince July.
Among the early buzz in the market, Ford stunned Wall Street, reporting a quarterly profitand saying that 2011 should be "solidly profitable." Analysts had expected Ford to post a loss of 11 cents a share, but the company instead earned seven cents. Ford shares jumped more than 8 percent.
This came a day before automakers report their October sales. Analysts say sales likely rose last month but caution that they are still at 1980s levels.
A couple days before retailers report on their October sales, Wal-Mart once again slashed its toy prices.
Retailers are expected to report an uptick in salesbut analysts remain wary about the outlook for the holiday season.
Retailers started the day mostly lower, with Sears and Bon-Ton down about 2 percent, but gradually gathered some strength with Nordstrom and Bed, Bath & Beyond up more than 1 percent.
In the morning's other earnings news, Clorox reported its profit jumped 23 percent as consumers stocked up on disinfectant products amid swine-flu fears.