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 Banks led the way down Monday. Morgan Stanley dropped 5.5 percent
and Bank of America Corp. sank 4 percent, the biggest fall in the
Dow Jones Industrial average.
"If Europe is going to be bring us down it's going to come through
the financial firms," said J.J. Kinahan, chief derivatives
strategist at TD Ameritrade.
The Dow lost 100.13 points, or 0.8 percent to close at 11,766.26.
The average lost 55 points in the last hour of trading as reports
emerged that the E.U. finance ministers couldn't drum up the full
200 billion euros ($261 billion) in new money to the International
Monetary Fund. European leaders had pledged the money for a special
IMF fund for struggling European countries at a summit meeting less
than two weeks ago.
Cautious comments from the head of the European Central Bank also
helped push stocks lower. The Standard & Poor's 500 index fell 14.31
points, or 1.2 percent, to 1,205.35. The Nasdaq composite index fell
32.19 points, or 1.3 percent, to 2,523.14
Mario Draghi, the ECB president, said Monday that the central bank
was looking for ways to keep the Eurozone's bailout fund working
even if credit rating agencies strip France of its AAA grade. The
bailout fund depends on the top ratings of France, Germany and the
countries that contribute to it. Draghi also restated his view that
large-scale government bond purchases were outside the central
bank's responsibility.
In the U.S., a gauge of sentiment among builders inched up to its
highest level since May 2010. The National Association of Home
Builders/Wells Fargo builder sentiment index added two points to 21
in December. Any reading below 50 still reflects a negative outlook.
Among companies making large moves Monday:
- Winn-Dixie soared 70 percent. The supermarket chain is being sold
to Bi-Lo LLC, another supermarket operator with stores in the
Southern U.S., in a deal valued at $560 million.
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Cablevision Systems Corp. rose 2 percent after an analyst from
Citibank said a recent drop in the company's stock seemed "way
overdone." The stock has lost 27 percent from the end of October
through last Friday following the unexpected resignation of its
chief operating officer.
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Bank of America ended the day at $4.99.
The drop puts it at risk
of further selling pressure because many mutual funds have rules
against holding stocks that trade below the $5 mark.
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Commercial Metals Co. dropped 1.4 percent. The company's board
rejected a $1.7 billion takeover bid from investor Carl Icahn,
saying the proposed deal undervalued the company.
The three major stock market indexes lost more than 2 percent last
week amid worries that some European governments would try to drop
the euro. Fitch Ratings warned Friday that it may cut the credit
grades for Italy, Spain and four other countries that use the
currency.
With two weeks of trading left in 2011, the S&P 500 is 4.2 percent
below where it started the year. The Dow has managed to gain 1.6
percent in 2011, led by McDonald's Corp. and its 26 percent gain.
Nearly four stocks fell for every one that rose on the New York
Stock Exchange. Trading volume was very light at 3.6 billion.
[Associated
Press By MATTHEW CRAFT]
Copyright 2011 The Associated
Press. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
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