Big selloff on Wall Street
Stocks tank as revived worries about the credit and mortgage markets overshadow an upbeat start to the holiday shopping period.
NEW YORK (CNNMoney.com) -- Stocks tumbled and bonds rallied Monday on revived worries about the threat of the credit and mortgage market crisis on the broad economy.
The Dow Jones industrial average (Charts) lost 240 points, or 1.8 percent, according to early tallies. The S&P 500 (Charts) index lost 2.3 percent and fell into negative territory for the year. The Nasdaq composite (Charts) fell 2.1 percent.
The early reports from the nation's retailers were positive, but they were overshadowed by the latest worries about the financial and housing market's threat to economic growth.
Oil prices fell and gold prices gained. Treasury prices jumped, lowering the corresponding yields. The dollar slipped again versus the euro.
Here's a look at what was moving near the close.
Government-backed mortgage lenders Fannie Mae (Charts) and Freddie Mac (Charts, Fortune 500) slumped on an analyst downgrade. Citigroup (Charts, Fortune 500) fell on speculation that it could announce big layoffs as part of a cost-cutting strategy. HSBC Holdings said it was stepping in to bail out two of its flailing funds.
Early reports on Black Friday and the weekend showed a strong turnout of shoppers, although no big splurgers. Investors were also tracking "Cyber Monday" results. But all the shopping news failed to distract investors from the broader worries.
"We had reasonably good retail numbers over the weekend, and people are keeping an eye on oil and the dollar, but basically the market is hanging in by the skin of its teeth after Friday's rally," said Ron Kiddoo, chief investment officer at Cozad Asset Management.
He said that although there is a lot of economic news due later in the week, stocks are likely to remain largely directionless as investors look to the monthly unemployment report due the following week - and try to assess what the Federal Reserve might do at the next policy meeting on Dec. 11.
Many market watchers are betting that the central bank will need to keep cutting interest rates at that meeting, so as to help temper the speed of the economic slowdown amid the credit and mortgage market fallout.
The fed funds rate, a key short-term lending rate, stands at 4.5 percent. Fed watchers are split about whether the bank will cut the rate by a quarter or half percentage point, or possibly not at all.
On Monday, the Fed's New York branch said it will offer a series of special short-term loans to make sure banks have enough cash available.
HSBC Holdings (Charts), Europe's leading bank, said that it will step in to bail out two funds it manages by transferring $45 billion of their assets onto its balance sheet. The short-term debt funds have been hit hard by the credit market tightening.
E*Trade Financial (Charts) slipped in active Nasdaq trade after a Wall Street Journal article said that any potential buyout could be delayed by concerns about its weakened mortgage portfolio. On Friday, E*Trade shares jumped on buyout talk.
Citigroup lowered its near-term outlook on the homebuilders, saying it is hard to see when the bottom will be made for the hard-hit industry. Centex (Charts, Fortune 500), Lennar (Charts, Fortune 500) and KB Home (Charts, Fortune 500) were among the names cited in the report.
On the upside, Dow component Boeing (Charts, Fortune 500) rose 1 percent after Wachovia upgraded the jet maker to "outperform" from "market perform," according to Briefing.com.
But it was one of the few Dow gainers, with 27 out of 30 blue chip stocks falling.
All financial markets were closed Thursday for Thanksgiving, and closed early Friday, with many Wall Streeters making a four-day weekend of it. Monday's trading volume was moderate, with participants continuing to drift back after the holiday.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by almost three to two on volume of 1.06 billion shares. On the Nasdaq, decliners beat advancers by a similar margin on volume of 1.59 billion shares.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.85 percent from 4 percent late Friday. Treasury prices and yields move in opposite directions.
In currency trading, the dollar dipped versus the euro, but held above the all-time low hit on Friday. The greenback was little changed versus the yen.
U.S. light crude oil for January delivery rose 48 cents to $97.70 on the New York Mercantile Exchange, erasing earlier gains.
COMEX gold for December delivery rose $1.80 to $826.50 an ounce.