Stocks fell on Tuesday, halting a six-day streak of gains, after weaker-than-expected results from Alcoa Inc and on concerns banks could face fees from the government to recoup losses tied to bailouts.
A senior U.S. official confirmed Monday President Barack Obama is considering a levy on financial services firms as part of the fiscal 2011 budget he will unveil in February. A Bloomberg report said the fee could raise as much as $120 billion.
It's kind of changing the rules in the middle of the game and that's causing investors to lock in some gains, said Alan Lancz, president of Alan B. Lancz & Associates Inc in Toledo, Ohio.
If that's a way we're going to recoup bailout funding ... it's going to squeeze profit margins in larger banks.
The Dow Jones industrial average <.DJI> fell 62.88 points, or 0.59 percent, to 10,601.11. The Standard & Poor's 500 Index <.SPX> lost 11.90 points, or 1.04 percent, to 1,135.08. The Nasdaq Composite Index <.IXIC> shed 32.51 points, or 1.41 percent, to 2,279.90.
The banking sector faced another potential hit after the Federal Deposit Insurance Corp on Tuesday floated a proposal that banks whose compensation plans encourage risk-taking would have to pay more for deposit insurance.
Shares of big banks fared worse than their regional counterparts. Bank of America
Aluminum producer Alcoa
Both companies weighed on the Dow, with Alcoa dropping 9.3 percent to $15.82 and Chevron slipping 0.8 percent to $80.25.
The losses at midday put the S&P 500 on track to break a six-day streak of gains. A rise on Tuesday would have matched a 1987 seven-day string of increases to start a new year. Both the Dow industrials and the S&P hit 15-month highs on Monday.
The Nasdaq fell more than the Dow and S&P 500 after Electronic Arts Inc
Procter & Gamble Co
Also bucking the market, MGM Mirage
(Additional reporting by Ellis Mnyandu; Editing by Kenneth Barry)