Nervous investors turn stocks lower

NEW YORK (CNNMoney.com) -- Stocks fell early Monday as recession fears fueled by last week's discouraging jobs report continued to curb investors' appetite for risk.

The Dow Jones industrial average (INDU) was down 0.3% about an hour into the session. The broader Standard & Poor's 500 (SPX) index fell nearly 0.5%. The Nasdaq composite (COMP) slipped 0.4%.

Stocks fell to their worst levels in nearly 18 months on Friday after the Labor Department said employers cut 63,000 jobs in February, the largest cut in five years.

The report stirred recession fears and increased speculation that the Federal Reserve could cut interest rates ahead of the central bank's scheduled meeting next week.

Mortgage lenders in focus. Fannie Mae (FNM) tumbled 6% after Barron's suggested the mortgage backer may need a government bailout if the housing market continues to deteriorate.

The FBI is looking into fraud allegations against mortgage lender Countrywide Financial Corp. (CFC, Fortune 500), a U.S. government official told CNN. Countrywide dropped 6%.

Thornburg Mortgage (TMA) was downgraded by a Jefferies & Co. analyst less than a week after one of the company's creditors issued a default notice.

Among the 30 stocks that make up the Dow, McDonald's (MCD, Fortune 500) rose more than 3% after the world's largest hamburger chain said its global same-store sales rose 11.7% last month, driven by growth in Europe and the benefit of an extra selling day this year.

Elsewhere, shares of drugmaker Wyeth (WYE, Fortune 500) fell slightly after the company said it will invest $280 million in a nutritional plant to be built in China.

Chevron (CVX, Fortune 500) and its partners have approved an investment of $3.1 billion to develop a gas project in the Gulf of Thailand. Shares edged lower.

Other markets. U.S. light crude oil for April delivery fell $1 to $104.15 a barrel on the New York Mercantile Exchange. Oil touched an all-time trading high of $106.54 on Friday.

In currency trading, the dollar dived to its lowest level versus the yen in three years and fell against the euro. The greenback touched a fresh record low against the euro Friday on the weak jobs report.

COMEX gold for April delivery fell $11.20 an ounce in New York following last week's run up. Gold prices, along with other dollar-traded commodities, have surged in response to the weak greenback.

Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.50% from 3.54% late Friday. Bond prices and yields move in opposite directions.