Stocks Skid Over 1% as Banks Drag; Gold Soars
Stocks tumbled more than 1 percent Monday, led by banks, amid concerns over debt problems in the United States and as the debt crisis continue in Europe, causing investors to move into safe haven assets like gold, which hit another record high.
The Dow Jones Industrial Average tumbled, led by Boeing and BofA , after ending higher on Friday, but finishing lower for the week. The blue-chip index is now on pace for its first three-month losing streak since Feb. 2009.
The S&P 500 and the tech-heavy Nasdaq also declined. The CBOE Volatility Index, widely considered the best gauge of fear in the market, jumped 10 percent to trade above 21.
All 10 S&P sectors were trading to the downside, led by financials and industrials.
“Uncertainty has not gone away over the weekend,” said Ryan Detrick, senior technical analyst at Schaeffer's Investment Research. “The markets are focusing on headline news again, and earnings have taken a backseat to what’s been going on.”
Detrick said he expects the S&P to continue trading in the current range.
Banks were under pressure with BofA and JPMorgan hitting fresh 52-week lows. Citigroup also slipped after Barclays cut its price target on the bank to $55 from $60.
Italian banks skid across the board, with shares of UniCredit briefly halting earlier, amid investor concerns over the sovereign debt crisis and the cost it could have on the sector.
On the eatnings front, Halliburton gained after the oilfield services company reported a 54 percent jump in profitas a U.S. drilling boom showed no signs of cooling off.
IBM and Mosaic are slated to report after-the-bell.
Throughout the week, approximately half of the Dow and more than 100 companies on the S&P are expected to report.
Meanwhile, News Corp remains in focus as the phone hacking scandal grows. Rebekah Brooks, former chief executive of News Corp's British newspaper arm News International, was released on bail early on Monday after being questioned over the phone-hacking scandal, the Metropolitan police said in a statement on Monday.
Brooks is set to appear before a parliamentary committee in London on Tuesday along with James and Rupert Murdoch.
WebMD plunged more than 25 percent after the healthcare information provider cut its 2011 forecast, citing delays and cancellation of consumer sponsorships.
Gold jumped to record highs above $1,600 an ounce, as bought into the metal as a haven from risk. (Read More: Gold to Hit $1,700 By Year End?)Gold miners were among the day's few gainers with AngloGold and Newmont up almost 2 percent each.
On the economic front, home builder sentiment rose more than expected in July but still remained near historic lows, according to the National Association of Home Builders.
The NAHB/Wells Fargo Housing Market index rose to 15 in July after falling to a nine-month low of 13 in June, the group said in a statement. Economists polled by Reuters had predicted the index would rise to 14. Readings below 50 mean more builders view market conditions as poor than favorable.
However, the homebuilders continued to trade lower including Beazer and Lennar , as the boarder markets fell overall.
With very little progress made over the weekend and no talks scheduled for today, debt negotiations to avert a default have failed to make a breakthrough so far.
European shares hit a four-month closing low, as bank stocks took a fresh beating on the first trading day following a much-hyped capital stress test that failed to dispel fears about the impact of the regional debt crisis.
Coming Up This Week:
MONDAY: Earnings from IBM
TUESDAY: Housing starts, Fed's Hoenig speaks; Earnings from BofA, Coca-Cola, Goldman Sachs, J&J, Wells Fargo, Apple and Yahoo
WEDNESDAY: Weekly mortgage apps, existing home sales, oil inventories; Earnings from Altria, United Tech, Abbott Labs, Blackrock, AmEx, Intel, Qualcomm and Ebay
THURSDAY: Weekly jobless claims, Philadelhia Fed survey, money supply; Earnings from AT&T, Morgan Stanley, Nokia, PepsiCo, Freeport McMoran, Travelers, Mircrosoft, AMD and SanDisk
FRIDAY: No major econ. news expected; Earnings from Caterpillar, GE, McDonald's, Schlumberger, Verizon, Honeywell
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