Early strength fades on concerns about banks and a decline in oil prices. The Dow (^DJI) lost 104.22 points, or 1.05 percent, to a level of 9,867.96. The S&P 500 (^SPX) fell 12.65 points, or 1.17 percent, to 1,066.95. The Nasdaq (^IXIC) gave up 12.62 points, or 0.59 percent, to 2,141.85. Volume was moderate on the session with the NYSE trading 1.39 billion shares and the Naz turning over 2.33 billion shares. Market breadth was negative on the session by a 7-to-23 and 8-to-19 margin on the Big Board and Naz respectively.

Stocks rallied early in the session following a positive earnings report from Verizon (VZ), but a downgrade of several bank stocks combined with a rise in the dollar and drop in oil prices to leave the major market indices lower. ING (ING) also played a role Monday with the stock falling sharply on the session.

ING lost 18.83 percent on the session to close at $14.10. The Dutch insurer fell following reports the company will split in two. Part of the move will have ING selling its U.S. online banking unit, ING Direct. The concern is that U.S. banks might follow a similar fate if they took government bailout money.

The Financial Select Sector SPDR (XLF) fell 2.58 percent to $14.71 on the session. Bank stocks took a hit to start the week, thanks in part to negative comments from Richard Bove at Rochdale Securities. Mr. Bove lowered SunTrust (^STI) and Fifth Third Bancorp (FITB) to “Sell” from “Neutral” and put US Bancorp (USB) at “Neutral” from “Buy.” These three stocks fell 5.38 percent, 7.93 percent and 3.21 percent respectively.

Shares of Dow component Verizon fell despite announcing better than expected earnings. VZ share lost 0.66 percent to close at $28.66 despite beating earnings estimate by a penny a share and adding more subscribers in the quarter than expected. Corning (GLW) shares fell nearly one percent despite besting estimates and predicting 15 percent growth for glass for flat-screen TVs.

Oil prices gave up $1.82 a barrel on the session to close at $78.68. Strength in the dollar pushed the commodity lower after it hit an intraday high at $81.58, just below its one-year high of $82. Of late, crude has followed the lead of the stock market and has moved inversely with the dollar. The Oil Services HOLDRs (OIH) fell 2.24 percent Monday to $124.18 with shares of Chevron (CVX) off 1.60 percent and ExxonMobil (XOM) down 0.46 percent.

Tuesday will see a pick-up in earnings reports on what is set to be the busiest week of the third quarter earnings season. Economic news will be light to start the week, but data on durable goods orders, new home sales, GDP and personal income and outlays will get plenty attention later in the week.

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site

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