Dow's biggest decline in 7 weeks
Wall Street pulls back after six straight weeks of gains on worries about banks, despite BofA quarterly results.
NEW YORK (CNNMoney.com) -- Stocks tumbled Monday as a six-week old rally lost steam on worries about financial sector earnings, despite Bank of America's better-than-expected quarterly results.
The Dow Jones industrial average (INDU) lost 290 points, or 3.6%. It was the biggest one-day selloff on a point basis since March 2nd.
The S&P 500 (SPX) index fell 37 points, or 4.3%. The Nasdaq composite (COMP) lost 65 points, or 3.9%.
Stocks tumbled in the morning and remained in the red through the afternoon as investors bailed out of a variety of sectors after the recent run. All 30 Dow components slipped, led by oil stocks Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500), as well as Hewlett-Packard (HPQ, Fortune 500), 3M (MMM, Fortune 500), Procter & Gamble (PG, Fortune 500) and Wal-Mart Stores (WMT, Fortune 500).
The S&P 500 has advanced almost 29% over the past six weeks on bets that the economy is closer to finding its footing. The gains followed a selloff that left the broad index at a more than 12-year low.
Some better-than-expected profit reports over the last week have helped sentiment. But investors seem to be skeptical of some of the financial sector results, many of which have been soundly beating forecasts, including JPMorgan Chase (JPM, Fortune 500), Goldman Sachs (GS, Fortune 500) and Citigroup (C, Fortune 500).
"It's always about the financials. They brought us up and they bring us back down," said Joseph Saluzzi, co-head of equity trading at Themis Trading.
"We had a nice run over six weeks, but it was still a bear market rally," he said. "Now today, people are looking at Bank of America and asking how they could have earned what they did and whether it's just a one-time thing."
(Big banks have a big credit problem).
After the close of trade, IBM (IBM, Fortune 500) reported higher earnings that topped estimates on weaker revenue that missed estimates. The company also reiterated its goal of earnings of $9.20 per share in 2009 and said it is well on its way to meet its profit goal of $10 to $11 per share in 2010. Shares fell 1% after the close.
Also after the close, Texas Instruments (TXN, Fortune 500) reported weaker quarterly sales and earnings that topped expectations. TI also forecast first-quarter earnings per share that is more than what analysts are currently expecting. Shares gained nearly 3% after the close.
Dow components Caterpillar (CAT, Fortune 500), Coca-Cola (KO, Fortune 500), Merck (MRK, Fortune 500) and United Technologies (UTX, Fortune 500) are all due to report results before the start of trading Tuesday. Analysts expect all four companies to report lower quarterly earnings versus a year ago.
Bank of America: The Dow component reported a first-quarter profit of $4.2 billion that handily topped forecasts. But the company also warned about deteriorating credit quality and that sent shares lower. Bank of America (BAC, Fortune 500) shares lost 24%. (Full story)
Citigroup, Wells Fargo (WFC, Fortune 500), JPMorgan Chase and American Express (AXP, Fortune 500) were among the other bank shares falling. The KBW Bank (BKX) index lost 15.4%.
Company news: In deal news, Oracle (ORCL, Fortune 500) will buy Sun Microsystems (JAVA, Fortune 500) for $7.4 billion or $9.50 per share. The deal follows news that Sun reportedly spurned a $7 billion buyout offer from IBM earlier this month.
In other deal news, PepsiCo (PEP, Fortune 500) has reportedly offered $6 billion to buy the stake it doesn't already own in its two biggest bottlers.
Meanwhile, General Motors (GM, Fortune 500) is planning to cut about 1,600 employees this week as part of a previously announced plan to cut 3,400 of its 29,500 U.S. salaried employees.
Market breadth was negative. On the New York Stock Exchange, losers topped winners by more than 9 to 1 on volume of 1.76 billion shares. On the Nasdaq, decliners beat advancers by five to one on volume of 3.08 billion shares.
Economy: Adding to the weakness was a worse-than-expected reading on the index of leading economic indicators put out by the Conference Board, a business research group. March LEI fell 0.3% after falling 0.2% in February. Economists surveyed by Briefing.com thought it would fall 0.2%.
Bonds: Treasury prices rallied, lowering the yield on the benchmark 10-year note to 2.84% from 2.94% Friday. Treasury prices and yields move in opposite directions.
Lending rates were mixed. The 3-month Libor rate was unchanged from 1.10% Friday, according to Bloomberg.com. The overnight Libor rate fell to 0.22% from 0.24% Friday. Libor is a bank-to-bank lending rate.
Other markets: In global trading, Asian markets ended higher and European markets ended lower.
In currency trading, the dollar gained versus the euro and fell against the yen.
U.S. light crude oil for May delivery slumped $4.45, or nearly 9%, to settle at $45.88 a barrel on the New York Mercantile Exchange.
COMEX gold for June delivery rose $19.60 to settle at $887.50 an ounce. 
