U.S stocks declined on Monday after turbulent Monday trading as financial sector woes deflated holiday sentiment entering the post Thanksgiving week.
The Dow Jones Industrial Average plunged 237.44 points, or 1.83 percent, to close at 12,743.44, while the tech-heavy Nasdaq Composite Index was down 55.61 points, or 2.14 percent, at 2,540.99.
Citigroup Inc., Lehman Brothers Holdings Inc. and Merrill Lynch & Co. declined after Goldman Sachs Group Inc. said HSBC Holdings Plc faces $12 billion in additional write-downs.
Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, tumbled after UBS AG said higher credit costs will cause earnings growth to slow.
Investors fear that most of these financial institutions have not put all their cards on the table when it comes to subprime exposures, said Stuart Freeman, chief equity strategist at AG Edwards in a note. Fear of the unknown -- how much more will be written down -- is what bothers stock market investors most.
Financial shares dropped to the lowest since May 2005 after the Federal Reserve said ``heightened pressures in money markets'' prompted it to take steps to increase the cash available to banks for loans.
Retailers also felt the bite despite an enthusiastic holiday weekend. Target Corp. and Macy's Inc. led retailers lower on concern consumers will spend less on holiday gifts.
A study from the National Retail Federation calculated that the average shopper spent 3.5% less than last year between Thanksgiving Day and Sunday, though 4.8% more customers shopped.