Stocks moved lower off the market opening on a fresh round of bad news for financials and an economic sign that the US consumer was continuing to struggle.
Major indexes fell slightly as analysts issued downgrades for a handful of large Wall Street banks and oil edged higher.
Oil prices gained after the dollar declined amid a report showing that the US trade deficit narrowed in June, news that might normally be considered positive but in this case indicated that consumers were buying fewer imports because of economic troubles.
Analysts were watching financials for clues to gauge the strength of the recent stock market rally.
"I think slowly but surely we're getting to the bottom of the difficulties on the balance sheets," Robert Hardy, managing director at Labranche, said on CNBC. "Can the market do something without the financials? Most likely not."
That could foretell trouble for the market Tuesday. Banks tumbled across the board after the opening bell, with the worst damage coming to some of the sector's biggest names.
Goldman Sachs shares were among the biggest casualties after a downgrade from Deutsche Bank as well as Oppenheimer analyst Meredith Whitney, who cut the third-quarter share view to $2.15 from $3.54 and rated the stock "market perform."
JP Morgan incurred losses of about $1.5 billion for the quarter to date, as it continued to be hurt by wider credit spreads, lower levels of liquidity, as well as the disruption in the credit and mortgage markets. JPMorgan led Dow losers.