Stocks are continuing to show weakness during early afternoon trading on Monday, as profit taking and reports of a failed merger between Sun Microsystems (JAVA) and IBM (IBM) are driving the broader markets lower.

Sun Microsystems is suffering considerable weakness after media reports said that acquisition talks between IBM and Sun have collapsed, putting the deal at risk of failure. Shares of Sun are currently down 24 percent.

The reports said that Sun's board rejected a formal acquisition offer by IBM on Saturday, sending a notice terminating Sun's deal to hold talks exclusively with IBM. In response, IBM reportedly withdrew its offer to acquire Sun on Sunday.

Additionally, the banking sector has come under pressure after veteran banking analyst Mike Mayo initiated coverage on many banks at Sell or Underperform.

In other news, the U.S. Treasury Department has extended the deadline for applications to its public-private initiative to buy up distressed assets from banks. The deadline has been pushed out two weeks until April 24.

The major averages have seen some further downside in recent trading, falling to new lows for the session. The Dow is currently down 150.30 at 7,867.29, the Nasdaq is down 39.22 at 1,582.65 and the S&P 500 is down 18.84 at 823.66.

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