Stocks Skid as Bank Stocks Tumble

Stocks skidded Tuesday as the glow from the rebound in housing starts faded and bank stocks skidded.

Stocks started the day higher but there wasn't a lot of conviction in the market's climb and soon, the Dow slipped into negative territory.

This came after the worst day for stocks in a month, when major averages shed more than 2 percent and the CBOE Volatility Index ended at nearly 31 after a key manufacturing gauge came in weaker than expected.

Monday's 187-point loss for the Dow was the first time in 10 sessions the Industrial Average had chalked up a triple-digit move in either direction — earlier this year, triple-digit moves were the norm rather than the exception. 

Tuesday's data were brighter: Housing starts jumped 17.2 percentin May, mostly due to a surge in multifamily construction, after sliding 12.9 percent in April. New building permits, a gauge of future building activity, rose 4 percent, the biggest gain since last June.

And inflation remained pretty tame: Producer prices climbed 0.2 percent in May, while core prices, which exclude the volatile food and energy components, slipped 0.1 percent. Economists had expected a much sharper 0.6-percent increase amid rising energy prices.

Industrial production fell 1.1 percent in May, after a 0.7-percent drop in April. Capacity utilization fell to 68.3 percent.

Banks skidded following news that the Obama administration plans to create a Consumer Financial Protection Agencyto help protect consumers' credit, savings and other banking transactions.

The news emerged from an anonymous administration official because the agency hasn't been offiically announced yet.

Bank of America was among the sector's biggest decliners, as was Fifth Third Bank. Citigroup, JPMorgan and Wells Fargo also declined.

General Motors shares rose following news the company is selling its Saab unit to a Swedish carmaker.

Research In Motion rose after T.Weisel raised its price target on the stock to $92 from $85. Analysts expect to see solid numbers from the Canadian company, which makes the BlackBerry, when it reports earnings after the bell Thursday.

"RIM has shown throughout the recession continued strong subscriber growth, continued growth in market share and continued growth — more importantly — on both the enterprise as well as the consumer side," independent technology analyst Carmi Levy told Reuters.

And RIM has a new device coming out later this summer, the BlackBerry Tour, which aims to find the middle ground of personal and corporate use.

Microsoft also got an upgrade on its price target: Jefferies raised its target on the stock to $26 from $22 and backed its "buy" rating on the stock ahead of the release of the new Windows.

Chip stocks opened weak but started to make a comeback.

Retail stocks declined, with Best Buy down more than 3 percent after the electronics retailer reported its earnings fell 15 percent.

Elsewhere in the markets, Duncan Energy Partners said Monday it is offering 8 million common shares representing limited partner interests.

The company said it will use the proceeds to repurchase an equal number of its common units owned by affiliates of Enterprise Products Partners LP at the same net price per unit, after deducting underwriting discounts and commissions.

This Week:

TUESDAY: Obama hosts South Korean leader to discuss North; Earnings from Adobe after the bell
WEDNESDAY: Bernanke speaks; weekly mortgage applications; CPI; crude inventories; Obama to outline plans for financial reform; Earnings from FedEx
THURSDAY: Weekly jobless claims; leading indicators; Philly Fed index; Earnings from Research In Motion
FRIDAY: Quadruple witching

- Peter Schacknow, Senior Producer,, contributed to this report.

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