Stocks fell on Monday after American Express Co
It was Wall Street's first decline after a four-day winning streak. The Nasdaq fell nearly 2 percent as investors booked profits in semiconductor stocks following a strong week. An index of semiconductor shares <.SOXX> fell 3.6 percent, following a 13 percent rise last week.
American Express, which caters to wealthier consumers that are viewed as more credit worthy, said its credit card default rates rose to 8.7 percent in February. Shares of American Express lost 3.3 percent to $12.66.
American Express took the legs out from under us, said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. When they came out that the default rates were higher in the last quarter, that accelerated the selling, he added.
Intel also put pressure on the Nasdaq after the company accused Advanced Micro Devices
The Dow Jones industrial average <.DJI> shed 7.01 points, or 0.10 percent, to 7,216.97. The Standard & Poor's 500 Index <.SPX> declined 2.66 points, or 0.35 percent, to 753.89. The Nasdaq Composite Index <.IXIC> lost 27.48 points, or 1.92 percent, to 1,404.02.
The declines put the brakes on last week's four-day rally. Even after the recent advance, the S&P 500 is down 16.5 percent in 2009 and off more than 50 percent from highs reached in October 2007.
Banks had earlier pushed indexes higher after British bank Barclays Plc
The comments echoed those made last week by Bank of America Corp
The S&P financial index <.GSPF> reversed earlier gains to end down 1.9 percent.
Analysts also noted that despite the positive comments from banks, questions over what measures the U.S. government will take to shore up the financial system still weigh on investors.
While we've had a significant rally, I think there's still too many questions that need to be answered for people to feel comfortable piling into the market even here, said Michael James, senior trader at regional investment bank Wedbush Morgan, in Los Angeles.
Among Nasdaq stocks, shares of Intel fell 3.1 percent to$14.25.
AMD, which denied Intel's charge that it had breached a cross-licensing agreement, dropped 1.6 percent to $2.48 on the New York Stock Exchange.
Comments from Federal Reserve Chairman Ben Bernanke helped improve investor sentiment after he said during an interview on the CBS program 60 Minutes on Sunday that the U.S. recession could probably come to an end this year and we'll see recovery beginning next year.
Financial stocks were also helped by news that the Financial Accounting Standards Board, which sets U.S. accounting rules, proposed to allow more leeway on mark-to-market accounting rules.
Mark-to-market accounting has forced financial institutions to write down billions of dollars in assets.
In economic news, a report showed that a gauge of New York State manufacturing activity hit a record low in March.
(Additional reporting by Herb Lash; Editing by Jan Paschal)