YAHO [BRIEFING.COM]: The possibility that General Motors and
Chrysler may be facing bankruptcy along with renewed concerns that banks may
need more federal financing provided market participants with two good reasons
to sell stocks Monday. The downward move was underscored by broad-based
weakness, which took the S&P 500 to a 3.5% loss. The S&P 500 has fallen
more than 5% during the course of the last two sessions.
Stocks were under pressure for the entire session. Pessimism was
provoked by news the
In a statement, GM indicated it will address the issues to improve
its long-term viability, including restructuring financial obligations.
Though automakers (-8.3%) and autoparts
and equipment companies (-5.9%) displayed marked weakness for the entire
session, financial stocks weighed the most on trading. Financials fell 9.4%
after Treasury Secretary Geithner stated this last
weekend that banks may need more bailout funds. The news weighed most heavily
on diversified banks (-13.5%) and diversified financial services companies
(-12.0%).
Consumer finance companies (-12.9%) also showed weakness, but their
decline was more closely related to an article in The Wall Street Journal indicating an accounting rule change
could block capital for certain credit card issuers.
Gains among financials were few and far between, but Fifth Third Bancorp (FITB 2.48, +0.13) was able
to trade higher after announcing it will sell a majority stake in its
processing business to Advent for $561 million in cash. The two companies will
operate the business as a joint venture.
Though all 10 sectors in the S&P 500 closed lower, health care
(-0.7%) was the only one able finish with a loss of less than 1%. Abbott Labs (ABT 47.89, +1.29) provided support to the
sector, thanks to favorable reports about one of the company's stents, and
separate reports late in the session that indicated Abbott held preliminary
talks with Wyeth
(WYE 43.00, -0.11), which suggest the company is open to ride the sector's
recent merger wave.
The session's broad sense of pessimism prompted a broad-based
selling effort, in which more than 90% of the companies in the S&P 500
closed with losses. Still, stocks were able to pare a portion of their losses
heading into the close as the S&P 500 found support at a key technical
support level around 781.
Participants return to Tuesday's trading without many market-moving
earnings or economic reports to digest. There are no earnings reports of
consequence heading into tomorrow's open, and the only noteworthy items on the
day's economic calendar include the S&P/Case-Shiller
Home Price Index for January and the Consumer Confidence Index for March.
However, investors are heading into quarter-end, which could lead to additional
volatility in the coming session.DJ30 -254.16 NASDAQ -43.40 NQ100 -2.5% R2K
-3.0% SP400 -3.5% SP500 -28.41 NASDAQ Dec/Adv/Vol
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