Stocks rise moderately in early trading
Stocks were pounded Monday as interest rates and the dollar surged and oil prices tumbled.
Financial stocks led the way down on downgrades of some bank stocks by an analyst and on worries about new rules for “too big to fail” institutions.
The market started the day higher but turned sharply lower as a rebound by the dollar stalled a rally in commodities.
Stocks have fallen in four of the last five days.
In the space of about an hour, the Dow Jones industrial average went from being up about 100 points to down 122. The blue-chip index finished with a 104-point decline for the day.
Oil also rose early in the day before heading south. Crude futures settled at $78.68 a barrel, down $1.82. That hurt the shares of major oil companies.
The Dow fell 104.22 points, or 1%, to 9,867.96. It was the index’s fourth drop in five sessions and its second consecutive triple-digit loss.
The broader Standard & Poor’s 500 index fell 12.65 points, or 1.2%, to 1,066.95. The index, which is the basis for many mutual funds, is down 2.8% from its recent peak a week ago.
The technology-focused Nasdaq composite index fell less sharply, dropping 12.62 points, or 0.6%, to 2,141.85.
The Russell 2,000 index of smaller companies fell 1.2%.
About three stocks fell for every one that rose on the New York Stock Exchange.
Yields on government bonds jumped. The benchmark 10-year Treasury note climbed to 3.55% from 3.47% late Friday. It was the first time since late August that the 10-year yield topped 3.5%.
The dollar rose against most other major currencies, while gold fell.
Financial stocks in the S&P; 500 sank 2.5%, more than any other broad industry group, as investors focused on efforts in Washington to impose new rules on the largest financial institutions.
“We’re seeing legislation in Washington drive trading,” said John Brady, senior vice president of global interest rate products at MF Global in Chicago.
Meanwhile, Rochdale Securities bank analyst Richard Bove lowered his ratings on Fifth Third Bancorp, SunTrust Banks and US Bancorp. Fifth Third tumbled 7.9%, SunTrust slid 5.4% and US Bancorp fell 3.2%.
Home builder stocks fell as investors tried to determine whether Congress would extend a tax credit for first-time home buyers.
European stocks headed lower after shares sank on Wall Street. Key stock indexes fell 1% in Britain and 1.7% in France and Germany. Japan’s Nikkei stock average rose 0.8%.
