Stocks fall as investors grab some profits
NEW YORK -- Investors cashed in some gains Monday as financial stocks pulled back following a sharp rally last week.
Bank shares dragged the market lower as traders worried that stocks, and particularly the hard-hit financials, had risen too quickly since the stock market's rally began two months ago.
Some of last week's relief over the reassuring marks most banks earned during government "stress tests" evaporated Monday as investors looked ahead.
Four of the banks that Washington determined were sound enough to survive a worsening in the economy said Monday they planned to issue shares to help repay loans the government doled out last fall to lubricate the nation's stalled financial system.
The Dow Jones industrial average fell 156 points. The KBW Bank Index, which tracks 24 of the nation's largest banks, slid 7.1% after jumping 12.1% Friday.
U.S. Bancorp, Capital One Financial and BB&T said they hoped to raise $1.5 billion to $2.5 billion through stock sales. Bank of New York Mellon Corp. said it would offer $1 billion in stock.
Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York, noted that the Dow has risen about 30% since March — about twice as much as the market might do in a full year of strong gains.
"To take a break here is healthy," he said.
The sell-off wasn't across the board and trading was light compared with last week. That suggests many buyers were taking a break, and not that sellers were out in force.
Two stocks fell for every one that rose on the New York Stock Exchange as analysts said the market was overdue for a break. Last week alone, Wells Fargo jumped 43.7% and JPMorgan Chase rose 19.9%.
The Dow fell 155.88, or 1.8%, to 8,418.77. The Standard & Poor's 500 index fell 19.99, or 2.2%, to 909.24, while the Nasdaq composite index fell 7.76, or 0.5%, to 1,731.24.
