Oil can't stop tech wreck

NEW YORK (CNNMoney.com) -- Technology led a bigger market selloff Monday afternoon, as investors shrugged off a turnaround in oil prices and opted to bail out of a variety of sectors.

Jitters at the start of a big week for company earnings added to the session's troubles.

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The Dow Jones Industrial average (down 107.75 to 12,457.78, Charts) lost 0.8 percent with more than 2 hours left in the session, and the broader S&P 500 (down 7.69 to 1,422.81, Charts) index lost 0.5 percent. The tech-heavy Nasdaq (down 20.55 to 2,430.76, Charts) composite lost 0.8 percent.

Stocks were mixed last week, with tech the weakest sector, as investors welcomed a mostly upbeat start to the earnings reporting period but showed caution after last year's big rally and a rebound in oil prices.

That hesitation remained in place Monday morning, when oil prices jumped back above $53 a barrel on the New York Mercantile Exchange, in response to colder Northeast weather.

However, an afternoon about-face in the price of oil failed to inspire investors, with stocks remaining in the red.

Monday's stock retreat was an acceleration of what started Friday, said Joseph Saluzzi, co-head of equity trading at Themis Trading. He noted that the recent rebound in oil prices seems to have sparked a short-term rotational move out of technology and into commodities.

In addition, the major gauges are in danger of breaking key technical support levels that traders watch, he said, which could spark more selling.

"A lot of hot money came into the market at the start of the year and so now you're seeing some of that getting moved out," he said.

However, the early-year advance and the fluctuations now are fairly typical of this time of year, he said, and don't have to suggest a change in the overall upward trend of the market.

A variety of technology shares slumped, including widely-held issues such as Dell (down $0.66 to $24.36, Charts), Cisco Systems (down $0.17 to $26.53, Charts) and Microsoft (down $0.50 to $30.61, Charts).

In other tech news, Sun Microsystems (down $0.02 to $5.75, Charts) will reportedly announce later Monday that it will start using chips from Intel (up $0.00 to $20.82, Charts) as well as the chips it currently uses from Advanced Micro Devices. The deal is seen as a setback to the smaller AMD (down $0.34 to $17.39, Charts), and sent shares lower.

Pfizer (down $0.29 to $26.93, Charts), a Dow component, reported higher quarterly earnings on flat sales Monday. Excluding the sale of its consumer health products and other one-time items, Pfizer earnings were lower.

Fellow Dow component Boeing (down $3.68 to $84.95, Charts) slumped almost 4 percent after Wachovia downgraded it to "market perform" from "outperform," Reuters reported.

Citigroup (up $0.41 to $54.91, Charts) was one of the Dow 30's few gainers. The financial services firm rose on news that it has moved its chief financial officer, Sallie Krawcheck, to the job as head of its Global Wealth Management division.

In other deal news, Swift Transportation (up $2.55 to $30.29, Charts) agreed to be taken private by its founder for $2.74 billion.

The rebound in oil prices over the last few sessions hit the stocks of companies that are sensitive to higher oil prices, such as airlines, truckers and railroads. The about-face of oil prices Monday afternoon failed to help those sectors.

The Amex Airlines (Charts) index lost 2 percent, with JetBlue Airways (down $0.26 to $15.50, Charts) and Continental Airlines (down $0.71 to $47.49, Charts) among the losers.

The Dow Jones Transportation average (down 59.61 to 4,799.69, Charts) fell 1.2 percent.

Market breadth was negative. On the New York Stock Exchange, losers topped winners by more than three to two on volume of almost 1 billion shares. On the Nasdaq, decliners beat advancers by nearly two to one on volume of 1.31 billion shares.

Treasury prices rose, lowering the yield on the benchmark 10-year note to 4.76 percent from 4.77 percent late Friday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar gained versus the yen and euro.

COMEX gold fell $2.10 to $634.30 an ounce.

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