Credit fears keep stocks in the red

NEW YORK (CNNMoney.com) -- Major gauges remained lower Monday morning as Citigroup's warning that it could suffer billions more in mortgage-related losses fanned credit market fears on Wall Street.

The Dow Jones industrial index (Charts) lost nearly 0.5 percent an hour into the session.

The broader S&P 500 index (Charts) slid almost 0.5 percent, while the tech-fueled Nasdaq (Charts) also fell 0.5 percent.

Weighing on stocks was Citigroup's Sunday announcement that CEO and Chairman Charles Prince would step down in the wake the company's mortgage-security losses.

The news provided little comfort to Wall Street, however, as Citi added a warning that it could take writedowns totaling as much as $11 billion in the fourth quarter because of bad mortgage bets.

James Awad, chairman of WP Stewart Asset Management, said the news troubled Wall Street that additional losses could follow from other banks and brokerages.

"The immediate catalyst was Citigroup but the broader issue is it looks like you are getting another wave of asset writedowns," said Awad.

"The fear is if financial institutions go through another period of stress, it could create another seize up in the credit markets," he added.

The news sent Citigroup (Charts, Fortune 500) shares about 5 percent lower in morning trade. But it also weighed on the broader financial sector, hitting shares both of investment banks Goldman Sachs (Charts, Fortune 500) and Morgan Stanley (Charts, Fortune 500), as well as retail-focused banks such as Bank of America (Charts, Fortune 500).

In other corporate news, the Internet conglomerate IAC (Charts, Fortune 500), which owns a host of firms including the Home Shopping Network, Ticketmaster and search engine Ask.com, announced Monday that it would split into five separately traded public companies.

Ford Motor (Charts, Fortune 500) said over the weekend it reached a tentative 4-year labor contract with the United Autoworkers Union, avoiding the threat of a strike.

And shares of the state-owned Chinese oil and gas firm PetroChina (Charts) nearly tripled in their market debut in Shanghai, passing Exxon Mobil (Charts, Fortune 500) in market value and becoming the world's first company worth $1 trillion.

On the earnings front, Burger King (Charts) reported better-than-expected first quarter earnings and revenue before the opening bell Monday, helped by movie tie-ins and improved sandwich sales.

Shares of WellCare (Charts) soared 37 percent Monday after the health insurance company said it would delay its quarterly results pending an investigation into a raid by state and federal authorities, although the company said it expected to report a 67 percent jump in profits.

In commodity trading, oil prices backed away from record highs amid easing tensions between Turkey and Kurdish rebels based in Iraq. Light, sweet crude for December fell $1.67 to $94.26 a barrel on the New York Mercantile Exchange.

Gold prices retreated after climbing to their highest level in nearly 28 years Friday, as COMEX gold for December fell 70 cents to $807.80 an ounce.

Treasury prices fell, lifting the yield on the benchmark 10-year note to 4.31 percent from 4.29 percent late Friday.

The dollar gained versus the euro and retreated against the yen.

In global trade, Asian stocks retreated, reflecting some of the credit concerns raised by the Citigroup news. European stocks were lower in midday trading.