Stocks tumbled at the open Monday as investors braced for the next batch of corporate earnings.
The Dow Jones Industrial Average dropped more than 100 points, or 1.5 percent in the first few minutes of trading. The tech-heavy Nasdaq lost nearly 2 percent.
The negative start to the week comes on that back of a six-week winning streak, which has led many investors to hope for an end to the worst of the stock-market slump. Strong first-quarter earnings added to last week’s gains, but with the majority of companies yet to report, the risk for bleak corporate news is still there.
Financials took a beating after a trifecta of disappointing news.
First was Bank of America earnings, which beat expectations, helped by Merrill Lynch, but also revealed a huge jump in troubled loans.
Investors were also troubled by a report that the government is converting its interest in bailed out financial institutions from preferred into common shares. The move is seen as a political maneuver that will enable the White House to avoid asking Congress for more money, but also constitutes a de facto nationalization of the businesses that will give the government ownership stakes.
And earlier buzz in the blogosphere indicated that bank stress-test results showed 16 of the 19 big banks tested were "technically insolvent." The Treasury later released a statement that the stress-test results weren't in yet.
President Barack Obama is looking to curb deceptive practices in the credit-card industry, which have helped to saddle consumers with huge debts, a senior aide said Sunday.
The entire financial sector fell sharply, including Dow components Citigroup and JPMorgan .
Sun Microsystems soared more than 30 percent following news that Oracle hasagreed to buy the computer server and software maker for $9.50 a share, a nearly 30-percent premium from Friday's closing price. The deal is valued at $7.4 billion.
Oracle shares fell more than 5 percent.
IBM, which had been in talks to buy Sun but then rejected any possibility of a deal last week, reports earnings after the closing bell. Analysts expect earnings of $1.66 a share.
Boston Scientific and Texas Instruments are also due to report after the bell.
PepsiCo beat its earnings target and backed its full-year outlook. The soft-drink maker also said it was offering about $6 billion to buy up shares in its two largest bottlers, Pepsi Bottling Group and PepsiAmericas, in a bid to further integrate the units.
Pharmaceutical giant Eli Lilly also topped forecasts, reporting earnings of $1.20 a share.
Outside of financials, General Motors was one of the biggest percentage decliners on the Dow as the auto maker is gearing up to let go of its controlling stake inOpel/Vauxhall, the Financial Times reported.
GM would ask for no cash for the stakes, just a pledge to invest directly in a new company formed from its European operations, the report said.
Also, GM said 1,600 workers would be losing their jobs in the next few days as efforts continue to cut costs.
MONDAY: Earnings from IBM, Boston Scientific, Texas Instruments after the bell
TUESDAY: Earnings from Caterpillar, Coca-Cola, Merck, Schering-Plough, Dupont, United Tech, Delta Airlines, Lockheed Martin, State Street, United Health, US Bancrop, Yahoo, Broadcom, Capital One
WEDNESDAY: Weekly mortgage applications; weekly crude inventories; Earnings from AT&T, Boeing, McDonald's, Morgan Stanley, Wells Fargo, Altria, Ingersoll-Rand, Kimberly-Clark, Apple, eBay, Qualcomm and Yum! Brands
THURSDAY: Weekly jobless claims; existing-home sales; Earnings from Conoco-Phillips, GlaxoSmithKline, Pepsi, UPS, Fifth Third, Marriott, PNC Financial, SunTrust, Union Pacific, US Air, Microsoft, Amazon, AmEx and Burlington Northern
FRIDAY: G-7 meeting in Washington; durable-goods orders; new-home sales; Earnings from 3M,Honeywell, Schlumberger and Xerox
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