By Donna Kardos Yesalavich
NEW YORK (MarketWatch) -- U.S. blue-chip stocks declined Monday,
pressured by financials as new details of a widespread
insider-trading investigation emerged and worries surfaced over
Ireland's debt woes.
The Dow Jones Industrial Average (DJI) closed down 24.97 points,
or 0.22%, at 11,178.5. The measure had been down by more than 100
points earlier in the day as investors worried over the stability
of the euro zone.
Leading the Dow's declines, Bank of America Corp. (BAC) , fell
3.1%, and J.P. Morgan Chase & Co. (JPM) slid 2.3%. Oil giants
Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) also were weak, but
pared some of their losses as oil climbed back above $81 a barrel.
Exxon shed 0.5%, while Chevron fell 0.6%.
Hewlett-Packard Co. (HPQ) was the measure's top performer,
rising 1.8% ahead of the company's quarterly earnings report, due
after the close.
The market tumbled early Monday after Ireland over the weekend
agreed to accept a bailout, formally applying for tens of billions
of euros in aid from the European Union and the International
Monetary Fund. Later in the day, stocks pared their losses after
Irish Prime Minister Brian Cowen said he would call for the
dissolution of parliament in the new year after a vital budget vote
Dec 7.
Investors said the bailout package alone wouldn't fix Ireland's
debt woes.
"This is not a liquidity question, it's a solvency question,"
said Michael Pento, senior economist at Euro Pacific Capital. "We
need to have a massive restructuring of the debt over there."
Other investors worried that other euro-zone nations still faced
the threat of "spillover effects," said Christian Hviid, chief
market strategist at Genworth Financial Asset Management. "It
wasn't too long ago that Ireland said they didn't need a bailout.
It's sort of telling that there's really no clarity as to whether
or not even policymakers really know how big the problem is."
The Standard & Poor's 500 Index (SPX) shed 1.89, or 0.16%,
to 1,197.84. Financials were the index's worst-performing
sector.
"It's a reminder to us, seeing what's going on with the European
banks, that our banks are also insolvent," said Michael Pento,
senior economist at Euro Pacific Capital.
Stoking fresh worries for the financial sector, The Wall Street
Journal reported that Federal Bureau of Investigation agents raided
the offices of three hedge funds, Diamondback Capital Management
LLC, Level Global Investors LP and Loch Capital Management LLC,
amid a far-reaching insider-trading investigation.
Investors said they were bracing for financials to take a hit as
more details of the investigation surface.
"It is the brokerage and the investment bankers that are going
to be the most likely targets of these investigations," said Robert
Phipps, a director at Per Stirling Capital Management.
Leading the sector's declines, Marshall & Ilsley (MI@) fell
4.6% and Regions Financial (RF) fell 2.7%.
The Nasdaq Composite Index (RIXF) edged up 0.1% to 2,520. The
index was boosted by a 6.6% jump in Novell Inc. An investor group
reached a deal to acquire Novell (NOVL) for about $2.2 billion,
ending an eight-month takeover battle for the software company.
The U.S. dollar index (DXY), which tracks the U.S. currency
against a basket of six others, rose 0.2%. Demand for Treasurys
increased, pushing yield on the 10-year note down to 2.64%. Gold
futures rose.
Shares of Tyson Foods Inc. (TSN) rose 6.1% after the meat packer
rebounded from a prior-year loss, posting earnings that topped
analysts' estimates.
Green Mountain Coffee Roasters Inc. (GMCR) surged 18% after the
coffee company said it plans to restate its financial statements
for the past three fiscal years and the first three quarters of
this year because of errors, bringing it closer to resolving its
accounting issues after the Securities and Exchange Commission
announced a probe of the company in September. Bank of America
Merrill Lynch upgraded its stock-investment rating on Green
Mountain to buy from underperform.