Stocks moved sharply lower over the course of the trading day on Monday, with the major averages giving back some ground after closing higher for six straight weeks. A negative reaction to the latest earnings news inspired traders to do some profit taking.

In an interview with RTT News, Jim Awad, managing director of Zephyr Management explained the market's sharp sell-off despite better than expected earnings from Bank of America (BAC) and several M&A deals, saying that the market has gotten a little bit too greedy in a short period of time.

Awad suggested that the market should remain in a trading range between Friday's high and the March low for the next couple of months.

Commenting on the decline by shares of Bank of America despite its better than expected results, Awad said that while the financial giant's top line appeared strong, a lot of its core metrics actually got worse. Awad also stressed that Bank of America and Citigroup are both still a work in progress.

Bank of America released its first-quarter results before the market open. While the company posted a better earnings figure than analysts had expected, a significant increase in loan loss protection made investors wary of holding onto the stock.

On the economic front, the Conference Board said its leading economic index fell 0.3 percent in March following a revised 0.2 percent decrease in February. The agency noted that the index has not risen in the past nine months.

In merger news, Sun Microsystems (JAVA) agreed to be acquired by Oracle (ORCL) for $9.50 per share in cash. The offer represents a 42 percent premium to Sun's closing price on Friday.

Oracle expects the acquisition to be accretive to its earnings by at least $0.15 per share on a non-GAAP basis in the first full year after closing.

Additionally, Pepsi Bottling Group (PBG) and PepsiAmericas (PAS) showed strong upward moves after PepsiCo (PEP) offered to acquire both bottlers for about $6 billion.

The major averages saw some further downside in the latter part of the trading day, ending the session near their worst levels of the day. The Dow closed down 289.60 points or 3.6 percent at 7,841.73, the Nasdaq closed down 64.86 points or 3.9 at 1,608.21 and the S&P 500 closed down 37.21 points or 4.3 percent at 832.39.

Sector News

Banking stocks were some of the worst performers of the day, leading the weakness in the broader markets. At the sounding of the closing bell, the Dow Jones Banks Index was down 14.7 percent on the day, pulling back well off the three-month closing high set on Friday.

Steel, real estate, and housing stocks also took a serious beating during the session. The Amex Steel Index closed down 9.4 percent, while the Morgan Stanley REIT Index and the Philadelphia Housing Index finished the trading day down 11.2 percent and 8 percent, respectively.

Additionally, with the price of crude oil showing a steep decline, closing down $4.45 at $45.88 a barrel, the oil services sector saw substantial weakness. Reflecting the weakness in the sector, the Philadelphia Oil Services Index closed down 6.7 percent.

Brokerage, semiconductor, and natural gas stocks also suffered considerable losses on the day by the sounding of the closing bell.

At the other end of the spectrum, gold stocks were some of the only advancing stocks of the session, driving the Amex Gold Bugs Index up 4 percent. The strength in the sector came as gold for June delivery closed up $19.60 at $887.50 an ounce.

Dow Components

At the close of trading, all thirty of the Dow components were well within negative territory, contributing to the substantial loss posted by the blue chip index. Financial stocks within the Dow showed some of the worst performances.

Citigroup (C) ended Monday's session down 19.5 percent. With the decline, the stock pulled back further off a recent, nearly three-month closing high.

Bank of America and American Express (AXP) also helped to lead the Dow lower, with Bank of America closing down 24.3 percent and American Express falling 13 percent.

General Motors (GM), JP Morgan (JPM), and Alcoa (AA) also posted notable losses, closing down 10.8 percent, 10.7 percent, and 9.7 percent, respectively.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed mostly higher on Monday, with Chinese stocks showing notable strength due in part to the Chinese premier's upbeat assessment that the economy is doing better than expected.

Meanwhile, the major European markets closed just off their lows of the day. The U.K.'s FTSE 100 Index finished the session down 2.5 percent, while the French CAC 40 Index and the German DAX Index posted losses of 4 percent and 4.1 percent, respectively.

In the bond market, treasuries ended the trading session near their intraday highs, firmly in positive territory. Subsequently, the yield on the benchmark 10-year note closed down 8.7 basis points at 2.834 percent.

Looking Ahead

Quarterly reports from IBM (IBM) and Texas Instruments (TXN) highlight the earnings agenda after today's closing bell.

A slew of companies are also scheduled to report before the bell on Tuesday, led by the soon-to-be merged Merck & Co. (MRK) and Schering-Plough Corp. (SGP). Other big names expected to report before the bell include Caterpillar (CAT), Coach (COH), Coca Cola (KO), Manpower (MAN) and New York Times Co. (NYT).

For comments and feedback: contact