Stocks were lackluster Monday despite a massive move downward for oil, as worries persisted over inflation and the nation's beaten-up housing and mortgage markets.
Major indexes held lower positions even as the trade continued to come undone. Energy and financial stocks led the move downward, exacerbated by broad losses across the commodities spectrum.
U.S. light, sweet crude lost nearly $4.50 per barrel and neared $120 as the dollar turned stronger and commodities tumbled across energy, grain and metals. The Dow turned briefly positive before edging lower, but was well off its lows of the day which saw the bluechip index sag more than 100 points.
Analysts worried that once oil closed, the damage for the market might heighten as Wall Street prepared for a Federal Reserve meeting Tuesday.
"I would think that we'll probably sell off after oil closes. No one's going to want to hold anything going into the Fed meeting tomorrow," Matthew Cheslock, of Cohen Specialists, said on CNBC. "We're seeing massive volatility on low volume."
Consumer stocks showed some strength as the Dow flirted with positive numbers. Pfizer and Wal-Mart led gainers on the index, while ExxonMobil pointed the way for most leading energy producers on the way down. The weakness in energy and commodity stocks helped depress the broader market from the bigger gains it usually sees when oil falls.
The market earlier was shaken by inflationary pressures amplified by a series of economic data releases that showed continued higher costs in the marketplace and stagnant wages, even as factory production continued to grow.
Financials pulled the market lower, with Wachovia and Freddie Mac sinking on continued fears over the health of the mortgage market. In tandem, home builders also slid lower as Oppenheimer analyst Meredith Whitney said on CNBCthat real estate prices would continue to move lower. Pulte Homes was the biggest loser on the S&P in the home builder sector.
In earnings, 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.