Stocks retreated Monday as investors took a breather after last week's run.
The Dow Jones Industrial Average lost 155.88, or 1.8 percent, to close at 8,418.77, as banks declined.
The S&P 500 and Nasdaq both finished lower, though the Nasdaq's loss was much less severe as tech stocks gained.
This came after stocks jumped 4.4 percent last weekas relief over the stress-test results sent banks soaring.
After a better-than-expected payrolls report on Friday, a survey out Sunday suggested the U.S. economy will resume growing in the third quarter.
Still, analysts said be wary of the recent rally.
"We're going to run out of steam," Manus Cranny, market commentator from MF Global, said. "We've had a fantastic 9-week run, nothing lasts forever."
Banks finished sharply lower Monday: Bank of America and JPMorgan lost about 8 percent each, while Citigroup shed 4 percent.
According to a weekend report in the Wall Street Journal, the Federal Reserve reduced the estimated size of banks' capital deficitsafter at least half of the 19 banks being tested balked at the Fed's calculations. Bank of America'sshortfall was reduced to $34 billion from about $50 billion and Citigroup'swas slashed to $5.5 billion from $35 billion.
Several institutions announced plans to sell shares to repay government funds through the Troubled Asset Relief Program, including Capital One Financial, US Bancorp, BB&T and Principal Financial Group, all of which lost more than 7 percent.
Wells Fargo and Morgan Stanley quickly addressed their capital needs by issuing stock offeringsFriday.
Richmond Federal Reserve President Jeffrey Lacker on Monday called for government protection of the financial industry to be rolled backbecause it had encouraged excessive risk taking at the heart of the current crisis.
"The financial safety net, especially those parts that were more implicit and perceived than explicit and written into the laws, played a significant role in the accumulation of risks that ultimately led to the turmoil we are still experiencing," Lacker said.
Investors will be keeping an eye on a speech about the financial system by Fed Chairman Ben Bernanke after the closing bell for insight on what's ahead for banks. He's speaking at an annual Atlanta Fed conference on financial markets.
The dollar rebounded from a four-month lowas the market's slide renewed interest in the currency as a safe haven.
Tech stocks turned higher after Citigroup on Monday upgraded its rating on the software and services sector to "overweight" from "market weight" but downgraded chips and chip equipment to "market weight" from "overweight."
And German software maker SAP said there may be "glimmers of hope" for the global economy over the next few months.
Dish Network was the biggest percentage gainer on the Nasdaq, jumping 17 percent, after the satellite-television provider beat its earnings target and lost fewer subscribers than analysts had expected.
Nvidia and Yahoo were among the other big winners on the Nasdaq.
Over on the Dow, four of the five advancing components were techs: IBM, HP, Intel and AT&T. The non-tech was Wal-Mart.
General Motors was the biggest percentage decliner on the Dow, falling 11 percent, after CEO Fritz Henderson said in a conference call that GM may move its headquarters out of Detroit. He also said GM would start notifying U.S. dealers about closures this week and that the automaker has an "urgent" need for funding for its European operations.
The Detroit News reported that GM will shift more production of U.S.-bound vehicles from Europe, Canada and Australia to cheaper labor countries, such as China, South Korea and Mexico. GM will also reportedly limit its total imports to one-third of its domestic sales.
Separately, the Wall Street Journal reported GM has hired an executive search company to help find replacements for half the board by summer.
On the earnings front, Warren Buffet's Berkshire Hathaway posted its first quarterly loss since 2001.
Earnings have slowed to a trickle this week, with only a few reports due out, including Wal-Mart and several other major retailers. In the coming week, retail sales are perhaps the most anticipated data point. Consumer prices and confidence are due out on Friday.
MONDAY: Bernanke speaks tonight at Fed conference
TUESDAY: Fed's Lockhart speaks; trade balance; federal budget; Earnings from Nissan, Applied Materials
WEDNESDAY: Weekly mortgage applications; retail sales; import prices; business inventories; weekly oil inventories; House hearing on AIG; Earnings from Macy's, Whole Foods
THURSDAY: PPI; weekly jobless claims; House hearing on the insurance industry; Earnings from Wal-Mart, Kohl's, Nordstrom
FRIDAY: CPI; industrial production; consumer sentiment; Earnings from JCPenney, Abercrombie
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