Stock selloff accelerates
Wall Street weakens after Citigroup downgrade revives worries about the mortgage and housing market fallout. Lowe's disappoints with its forecast.
NEW YORK (CNNMoney.com) -- Stocks slumped Monday afternoon as a dour note on the financial sector from Goldman Sachs revived worries about the fallout from credit and mortgage market troubles.
The Dow Jones industrial average (Charts) dropped more than 200 points, giving up around 1.6 percent, with less than 3 hours left in the session. The S&P 500 (Charts) index lost 1.9 percent. The Nasdaq composite (Charts) declined 1.9 percent as well.
Small cap stocks were hit harder with the Russell 2000 (Charts) falling 2.6 percent.
Goldman Sachs downgraded Citigroup (Charts, Fortune 500) to "sell" from "neutral" Monday and said the bank will likely have to take $15 billion in writedowns over the next two quarters due to bets on risky debt. Citigroup shares fell over 5 percent.
The comments sent the overall market lower, as investors were reminded that the problems in housing and financials threaten the broader economy - and consumer spending - heading into the important holiday retail sales period.
Goldman Sachs didn't alert Wall Street to anything it didn't already know, but was nonetheless effective in triggering a selloff, said Art Hogan, chief market analyst at Jefferies & Co.
"Every time the issue is brought up and quantified, the market rolls over," Hogan said. "Today is no different."
Weak results and a disappointing forecast from home-improvement retailer Lowe's added to worries about the consumer's ability to keep spending, ahead of Black Friday, the day after Thanksgiving and the unofficial kickoff to the holiday shopping period.
Also weighing on sentiment: more problems for the dollar.
"There are enough negatives out there that the market should be down, but I don't know that it should be down to this extent," Hogan said. "The punishment doesn't quite fit the crime."
All but five of the 30 blue chips that make up the Dow fell. In addition to Citigroup and the other financial components, other big decliners included GM (Charts, Fortune 500), Alcoa (Charts, Fortune 500), Walt Disney (Charts, Fortune 500) and AT&T (Charts, Fortune 500).
Market breadth was negative. On the New York Stock Exchange, losers topped winners over five to one on volume of 830 million shares. On the Nasdaq, decliners topped advancers by more than four to one on volume of 1.14 billion shares.
U.S. light crude oil for January delivery rose 13 cents to $93.97 a barrel on the New York Mercantile Exchange, after having been on both sides of unchanged through the morning.
Treasury prices rose, lowering the yield on the 10-year note to 4.14 percent from 4.16 percent late Friday. Treasury prices and yields move in opposite directions.
In currency trading, the dollar rebounded a bit against the euro and declined further versus the yen.
COMEX gold for December delivery fell $7.40 to $779.60 an ounce.