Stocks stumble after sprint
Wall Street steps back on weakness in bank and tech shares as investors plead exhaustion after a four-week run.
NEW YORK (CNNMoney.com) -- Stocks slipped Monday, retreating after a four-week run, on a bearish analyst note about the bank sector and a breakdown in merger talks between IBM and Sun Microsystems.
The Dow Jones industrial average (INDU) lost 42 points, or 0.5%. The S&P 500 (SPX) index dipped 7 points, or 0.8%. The Nasdaq composite (COMP) fell 15 points, or 0.9%.
Declines were steeper through the early afternoon, but stocks managed to cut losses late in the session.
The IBM-Sun breakdown dragged on techs Monday. But the weakness in financials was a bigger driver of the selloff after a prominent banking analyst downgraded the sector.
"If you haven't been following the bank stocks closely, you may have been lulled into a false sense of security," said Kim Caughey, senior equity analyst at Fort Pitt Capital Group. "This is reminding people that the banks still have a long way to go."
However, she said a modest pullback after a four-week run for the broad market was reasonable.
Stocks managed gains Friday, despite a brutal March jobs report, bringing the recent advance to four straight weeks.
Since hitting 12-year lows, stocks have been on a tear, with the Dow gaining 21% over four weeks. That was the blue-chip indicator's best four-week run since May 1933, when it gained 31%.
Stocks have been advancing on hopes that the economy and financial sector are closer to stabilizing thanks to some recent reports and the various government initiatives to staunch the slowdown.
This week, the focus turns to earnings, with Alcoa (AA, Fortune 500) due to begin the reporting period after the close Tuesday. Alcoa is expected to have lost 57 cents per share, according to analysts surveyed by Thomson Reuters. Alcoa earned 44 cents per share a year ago.
Also Tuesday, the consumer credit report from the Federal Reserve is due out at around 2:00 p.m. ET. Borrowing costs are expected to have fallen by 1.5% in February, according to a Briefing.com survey. Costs showed a surprise jump of 1.8% in January.
Deal in danger: IBM (IBM, Fortune 500)'s attempts to buy Sun Microsystems (JAVA, Fortune 500) fell apart Sunday after Sun rejected IBM's $7 billion offer, according to reports. Sun reportedly thought the asking price was too low. Analysts say the server maker is more likely to suffer the consequences of a failed deal than IBM.
Sun shares fell 22.7% and IBM shares fell less than 1%.
Banks: A variety of financial shares fell after an analyst said that the default rate on bank loans will exceed amounts seen during the Great Depression. Mike Mayo, of Calyon Securities, rated the overall banking sector "underperform" and initiated coverage on 11 major banks with either "underperform" or "sell" ratings.
Bank of America (BAC, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Wells Fargo (WFC, Fortune 500) were among the companies initiated with "underperform" ratings.
Fifth Third Bancorp (FITB, Fortune 500) and US Bancorp (USB, Fortune 500) were among the companies initiated with "sell" ratings.
The KBW Bank (BKX) index slipped 3.8%.
Autos: Ford Motor (F, Fortune 500) cut its automotive debt by 38%, or $9.9 billion, Reuters reported, helping it strengthen its balance sheet amid a broad industry downturn. Ford shares gained 16%.
Ford has held up better than rivals General Motors (GM, Fortune 500) and Chrysler, which have both flirted with bankruptcy even as they have accepted billions in emergency federal aid. Chrysler is privately held.
Other movers: MGM Mirage (MGM, Fortune 500) rallied 19% on reports that its looking to sell two of its non-Las Vegas properties to raise cash. The casino company is looking to sell its MGM Grand Detroit and Beau Rivage in Mississippi in a deal that could be worth about $2 billion.
Market breadth was negative. On the New York Stock Exchange, losers beat winners nearly two to one on volume of 1.30 billion shares. On the Nasdaq, decliners topped advancers two to one on volume of 2.05 billion shares.
Bonds: Treasury prices slipped, raising the yield on the benchmark 10-year note to 2.90% from 2.89% Friday. Treasury prices and yields move in opposite directions.
Lending rates mostly dropped. The 3-month Libor rate held steady at 1.16%, unchanged from Friday, according to Bloomberg.com. The overnight Libor rate inched higher to 0.28% from 0.27% Friday. Libor is a bank-to-bank lending rate.
Other markets: In global trading, Asian markets rallied and European markets fell.
In currency trading, the dollar gained versus the euro and the yen.
U.S. light crude oil for May delivery fell $1.46 to settle at $51.05 a barrel on the New York Mercantile Exchange.
COMEX gold for June delivery fell $24.50 to settle at $872.80 an ounce. 
