After moving sharply lower in early trading, stocks saw continued weakness throughout the trading day on Monday. While the major averages did not see much follow-through on their early downward move, they remained stuck firmly in negative territory.
The weakness in the markets came as investors responded to disappointing news regarding the auto industry as well as continued concerns about the outlook for the financial sector. Some traders also looked to cash in on the gains seen in the three previous weeks.
Much of the selling pressure came as President Obama and his auto task force indicated that General Motors (GM) and Chrysler have not gone far enough in their restructuring plans and need to step up their efforts to reorganize in order to receive additional government aid.
Financial stocks also experienced considerable weakness after Treasury Secretary Geithner suggested that more banks might need bailout funds.
Appearing on the Sunday talk shows, Geithner explained that the ongoing stress tests for the financial industry have shown many other banks need funds from the TARP, although he said there is only about $135 billion left in the bailout pool.
The major averages regained some ground going into the close of trading, but they remained firmly negative. The Dow closed down 254.16 points or 3.3 percent at 7,522.02, the Nasdaq closed down 43.40 points or 2.8 percent at 1,501.80 and the S&P 500 closed down 28.41 points or 3.5 percent at 787.53.
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