×

Stocks Slip as Inflation, Bank Fears Persist

Stocks opened modestly lower as economic indicators showed continuing inflation pressures and worries persisted over the state of the financial sector.

Major indexes moved to the downside despite a slip in crude oil prices, a condition that usually has pushed stocks higher.

In early earnings action, Europe's biggest bank HSBC said its first-half profit fell 28 percent, in line with forecasts, as a $14 billion hit on bad debts on U.S. home loans and asset writedowns offset strong Asian growth.

HSBC said pretax profit in the six months was $10.2 billion, down from $14.2 billion a year before. The average forecast in a Reuters poll of seven analysts was $10.1 billion.

Bank stocks were indicating widely lower, with Citigroup shares off after news circulated that the largest US bank was closing a $400 million convertible arbitrage fund.

Meanwhile, the Federal Reserve meets Tuesday to decide on monetary policy, while the European Central Bank and the Bank of England will both make decisions on short-term interest rates on Thursday. All three are expected to keep rates on hold this month, but any hints about future decision could trigger swings in the stock markets.

Shortly after the start of trading the government will release numbers on June factory orders.

Investors also will be watching General Motors and Ford after the two automakers said they are discussing a possible collaboration to develop new engines and powertrain technologies in an effort to cut research and development costs, the Detroit News reported Monday.

Looking to commodities, New York light crude prices were lower by more than $1 a barrel on indications that supply continues to rise.

Over the weekend, the U.S. said Iran had left the U.N. Security Council with no choice but to increase sanctions on Iran over its nuclear program.

Elsewhere in corporate news, Chrysler's financial arm said Sunday it had renewed its credit facilities, but had to arrange $24 billion in loans instead of the $30 billion it was originally hoped to secure.