Stocks skidded Tuesday as investors fretted over the state of the banking industry and braced for what could be a dire first-quarter earnings season.
The Dow Jones Industrial Averagewas down more than 2.5 percent in afternoon trading. The Nasdaq and S&P 500 were also down more than 2 percent.
Banks took a hit amid expectations that the IMF will report toxic debts held by banks and insurers will spiral to $4 trillion. Speculation was stirred by a report in The Times newspaper of Britain.
That just escalated concerns after analyst Michael Mayo said many of the recent fixes in the financial sector were merely "window dressing" and that problems in the sector persist.
One expert speaking out in defense of the sector was Meredith Whitney, a former analyst at Oppenheimer, who said banks' first-quarter earnings may show some improvement.
Shares of Bank of America and JP Morgan Chase were down in early trading, while Citigroup advanced.
Bank stocks may soon get a reprieve from the relentless pummeling from short sellers as U.S. securities regulators are developing two 'circuit breakers' to stem the practice, Reuters reported.
Investors are also bracing for a dismal earnings season, which unofficially kicks off today with a report from Dow component Alcoa after the bell.
Alcoa shares slipped ahead of its report; the aluminum maker is expected to post another big loss.
Earnings for the S&P 500 companies are expected to fall by nearly 37 percent, according to Thomson Reuters data.
Energy components ExxonMobil and Chevron were among the biggest drags on the Dow as light, sweet crude oil prices dropped below $50 a barrel.
General Motors was the biggest percentage decliner on the Dow as the automaker entered "intense preparations" for a possible bankruptcy filing.
Ford also skidded after a big surge Monday when the company said it was reducing its debt 38 percent.
Nokia shares were sharply lower, after WestLB downgraded the mobile-phone maker's stock to "sell" from "neutral."
Apple shares skidded after the company's planned iTunes price changes went into effect. Songs will now cost 69 cents, 99 cents or $1.29, with most, it seems, going for $1.29. That just goes to show you how powerful Apple is in the marketplace: A 30-percent price increase in the middle of a recession would be suicide for most other companies.
American depositary shares of BlackBerry maker Research In Motion also declined.
Sun Microsystems also faced more pressure a day after the company apparently rejected a takeover offer from International Business Machines . Questions are being raised about the future of Sun CEO Joanathan Schwartz.
Microsoft was higher for a little while after RBC Capital Markets upgraded its rating on the stock to "outperform" from "sector perform," along with several other software makers, citing attractive valuations and a decreased likelihood of earnings revisions.
In other news, a multi-million dollar Ponzi scheme aimed primarily at Chinese-Americans in the Dallas area has been stopped, according to the SEC. REgulators said the alleged fraudster called himself the "Chinese Warren Buffett."
On the economic front, February’s consumer credit data is out at 3 pm New York time.
Still to Come:
TUESDAY: Fed minutes; consumer credit; earnings from Alcoa and Bed, Bath & Beyond
WEDNESDAY: Weekly mortgage applications; wholesale trade; weekly crude inventories; earnings from Constellation Brands, Family Dollar
THURSDAY: Chain-store sales; BOE announcement; international trade; weekly jobless claims; import/export prices;l Lawrence Summers speaks; Bond market closes at 2pm
FRIDAY: All U.S. financial markets closed for Good Friday
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