Market Worry: Stocks Hitting Recent Lows Again

European stocks are weak on the back of more declines in European banks. Futures turned around, gaining three or four points, as oil fell about $1.50 right after 9 am ET. The decline in oil has accelerated, which will help the open.

News on the housing front was not great, with the S&P/Case Shiller report of home price indices down 14.1 percentin the first quarter compared to the first quarter last year; that's the biggest decline in the history of the index. If there's any good news, it was in line with expectations. New home sales out at 10 am ET.

The real worry here is stocks; we are down three out of four days and the uptrend that began with the March bottom has now been broken.

Many financials like Lehman are already sitting at or near their March lows; other groups like home builders are also drifting toward their January lows. Even market leaders like energy and materials saw profit-taking last week.

UBS is trading down today, but it traded down yesterday in Europe (when our markets were closed); today is the first day it is trading ex-subscription rights. Last week they announced a major rights offering (nearly $16 b, at a significant discount), which is going to result in significant EPS dilution. If you are a stock holder of record, you have now received the rights, which are trading separately at about $1.61.

As part of its prospectus for the rights offering, UBS warned that it may experience more losses tied to real estate.

Bank of America became the latest shop to cut second quarter numbers on the investment banks, including Lehman (where they now expect a loss), Morgan Stanley , and Goldman Sachs . Bernstein also cuts estimates on Lehman, Goldman, Morgan Stanley.

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