Stocks slipped on Tuesday as investors paused the day after a huge run-up to gauge if government plans to shore up the economy will be enough to sustain the recent market rally.
A drag from energy prices also contributed to the downside as oil prices softened after Monday's surge. Exxon Mobil
Financial shares <.GSPF> were off 2.1 percent as investors took profits following Monday's double-digit surge when long-awaited details on the government's plan to clean up soured assets from banks' balance sheets were released.
Tuesday's declines were modest and not unexpected after Monday's rally of about 7 percent, analysts said. Stocks have bounced off 12-year lows in recent weeks in the wake of aggressive moves from policy-makers to stabilize the economy, as well as positive comments from some major banks.
Most traders' expectations coming into today were that yesterday's upside move, while justified, was a little over extended, said Michael James, senior trader at regional investment bank Wedbush Morgan, in Los Angeles.
For those that are bullish, today's action is very encouraging, said James, noting that markets had given back only a small amount of Monday's gain.
The Dow Jones industrial average <.DJI> was off 70.65 points, or 0.91 percent, to 7,705.21. The Standard & Poor's 500 Index <.SPX> gave up 9.25 points, or 1.12 percent, at 813.67. The Nasdaq Composite Index <.IXIC> was down 26.94 points, or 1.73 percent, at 1,528.83.
The benchmark S&P 500 index is up about 20 percent from the bear market closing low set on March 9, but it remains off nearly 10 percent for the year.
As investors kept their eyes trained on maneuvers out of Washington, Treasury Secretary Timothy Geithner called for the authority to wind down failing institutions like American International Group
Among financial shares, Bank of America
Shares of General Electric
(Editing by Leslie Adler)