Stocks slid on Monday, as bank shares fell after a widely-followed analyst recommended investors reduce or sell holdings of several large bank stocks, sapping recent optimism on the health of the financial sector.
Banks shares stumbled after veteran banking analyst Mike Mayo of Calyon Securities started coverage on several large banks, citing the ongoing consequences of risk taking by banks in several different areas.
Adding to the negative tone on banks were comments by billionaire investor George Soros, who told Reuters the banking system as a whole is basically insolvent.
A few people came out and said the banks weren't in great shape and that's all it's going to take, said Warren Simpson, managing director at Stephens Capital Management in Little Rock, Arkansas. Whether or not these infusions from the government will be enough, nobody knows.
Uncertainty leads to fear and fear leads to selling.
Tech shares tumbled after a broker downgrade of Cisco Systems
The Dow Jones industrial average <.DJI> dropped 71.45 points, or 0.89 percent, to 7,946.14. The Standard & Poor's 500 Index <.SPX> fell 10.50 points, or 1.25 percent, to 832.00. The Nasdaq Composite Index <.IXIC> slid 29.01 points, or 1.79 percent, to 1,592.86.
The Select Sector SPDR Financial ETF
Cisco shares slid 4.6 percent to $17.33 and was one of the top weights on the Nasdaq after Goldman Sachs cut the stock to a neutral rating and removed it from the firm's Conviction Buy list.
Shares of Sun Microsystems Inc.
The U.S. job market continued to weaken in March, but the worst stages of the job losses may be over, the Conference Board, a private research group, said on Monday.
Earnings season is slated to begin on Tuesday when Dow component Alcoa
The blended growth rate, which combines actual numbers for companies that have reported and estimates for companies yet to report stands at negative 36.6 percent for the S&P 500, according to data compiled by Thomson Reuters.
(Editing by Theodore d'Afflisio)