Financials Lead Decline After Bank Failures

Stocks declined Monday, led by financials after two more banks folded. Oil ticked higher after three straight weeks of decline.

"I was hoping that we’d have a little negative over the weekend and get good selling today and capitulation tomorrow," Art Cashin, director of floor operations at UBS said on CNBC. "We came pretty close after Thursday to setting up for a possible reversal ...[but] I think we're going to stick with the meandering" in the market. "You can wish for the pony but you're not going to get the pony," Cashin quipped.

Oil bounced back after falling more than $6 last week. Oil has lost about 15 percent from its record close of $145.29 set on July 3.

The heavy-hitting economic data don't come until later in the week but investors have some pessimistic comments from Minneapolis Fed President Gary Stern to consider. Headwinds to economic growth may be picking up, while inflation is still a rising too rapidly, Stern said.

The Dallas Fed branch said its gauge of regional manufacturing activity dropped to minus-27.4 in July from minus-42.1 in June.

The market was buzzing after major buyout firm KKR said it would go public this year in a complicated transaction that involves delisting a publicly-traded fund in Amsterdam through a buyout.

Bank stocks lost steam from an early rally after more shoes dropped in the sector this weekend: Federal regulators shut down two more banks, First National Bank of Nevada, and First Heritage Bank, based in Newport Beach, Calif. Customer accounts were sold to Mutual of Omaha Bank.

This move came two weeks after the FDIC seized IndyMac bank, also based in California.

Financials were the biggest decliner among 10 key S&P indexes, and AIG and Citigroup were among the top drags on the Dow.

Shares of Fannie Mae and Freddie Macwobbled after Congress on Saturday approved a housing-rescue bill.

Merrill Lynch said Lehman Brothers is likely to post a loss for the third quarter and take an additional $2.5 billion in writedowns for home loans.

In today's earnings news, Dow component Verizon said its earnings rose 12 percent, helped by strong wireless sales, which offset a drop in landline users.

Shares of Kraft Foods rose after the maker of Oreo cookies and Kraft cheese beat expectations and raised its full-year forecast.

But Tyson Foods skidded after the meat producer reported a 92-percent drop in net income as results were hurt by a jump in grain prices.

Amgen soared after the pharmaceutical company on Friday said its experimental osteoporosis drug significantly reduced the risk of bone fracture in post-menopausal women. One analyst dubbed the drug a "future blockbuster."

Stocks in Europe were lower across the board, after the region's largest low-cost airline said profit plunged 85 percent in the latest quarter. Asian indexes were mostly higher, with shares in exporters following a rise in the U.S. dollar.

On Tap:

MONDAY: Fed's Mishkin speaks
TUESDAY: Case-Shiller home-price index; consumer confidence; Earnings from Colgate-Palmolive, Electronic Arts, Northrop Grumman, Sony, US Steel and Viacom
WEDNESDAY: Mortgage applications; crude inventories; Earnings from Comcast, Disney, Interpublic, Starbucks and Visa
THURSDAY: Q2 GDP; Chicago and Kansas City Fed branches report on manufacturing; Earnings from Aetna, Altria, ExxonMobil and Motorola
FRIDAY: Auto sales; Jobs report; construction spending; ISM manufacturing report; Yahoo annual shareholder meeting; Earnings from Chevron

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