Wall Street surrendered again Monday to investors' anxiety about the financial sector, sending the Dow Jones industrials back into bear-market...
NEW YORK — Wall Street surrendered again Monday to investors’ anxiety about the financial sector, sending the Dow Jones industrials back into bear-market territory. The flight from equities sent investors into safe-haven bets like Treasury bonds.
The Dow Jones industrial average fell 239.61, or 2.1 percent, to 11,131.08.
Microsoft, one of the 30 Dow stocks, declined 66 cents to close at $25.50 a share. Boeing, also a Dow stock, fell $1.49 to $62.34.
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Broader stock indicators also fell. The Standard & Poor’s 500 index declined 23.39, or 1.9 percent, to 1,234.37, and the Nasdaq composite index fell 46.31, or 2 percent, to 2,264.22.
Bond prices jumped as investors again sought the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 4.02 percent from 4.10 percent late Friday.
Financials that had rallied in recent weeks after logging huge declines suffered from the same worries about souring debt that caused an abrupt end to their run-up last week. Wall Street is concerned that a further withering of the housing and credit markets will damage bank-balance sheets.
An International Monetary Fund (IMF) report added to some of the stress in the market.
The IMF predicted continuing problems in the credit and housing market will continue to hurt the financial industry. It said, “at the moment a bottom for the housing market is not visible.”
Frederic Dickson, chief market strategist at D.A. Davidson & Co., said investors are still trying to get a longer-term view on the stability of the banking industry, particularly the regional banks.
“Corporate depositors and individual depositors are looking at balances at individual financial institutions. I think that’s unsettling some of the banks,” Dickson said.
On Friday, federal officials closed branches of the 1st National Bank of Nevada and First Heritage Bank — owned by Scottsdale, Ariz.-based First National Bank — adding to investors’ jitters about the ability of some banks to stay afloat.
The troubles that banks are having with bad debt underscore the difficulty that consumers are facing not only in keeping on top of their mortgages but also making their credit-card and car payments. Investors should get some insight with big economic reports due at the end of this week.
On Thursday, investors will be looking for the first report on gross domestic product for the second quarter. Economists polled by Thomson Financial/IFR expect the Commerce Department to report that gross domestic product rose, thanks in part to the government’s tax-rebate checks.
Then, on Friday, Wall Street will be awaiting the June employment report. The report — expected to show the seventh month of jobs losses — is important because consumers account for more than two-thirds of U.S. economic activity.
Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams, said investors were selling off financial shares because of their continued concerns about housing.
“They’re taking the financials to the woodshed,” he said. “Until the housing market stabilizes you’re really not going to see the financials stabilize.”