US stocks fell on Monday, with the Nasdaq and the S&P 500 down 1 percent, as investors sold off financial shares on fears of more credit losses, while concerns that the United States may already be in recession hurt shares of large manufacturers. The sell-off in financial stocks picked up speed around midday amid rumours that a Wall Street firm was facing liquidity concerns, according to traders.
Bear Stearns tumbled more than 13 percent to $60.34 but the stock pared losses slightly after Ace Greenberg, chairman of the executive committee of Bear Stearns, said liquidity rumours were "totally ridiculous."
Nevertheless, financials remained among the top drags, with shares of Bank of America Corp, the No 2. US bank, down New York Stock Exchange. Shares of Citigroup Inc, the largest US bank by assets, slid 4.8 percent to $19.90. "It really is a continuation of the pressure in the credit markets," said Joseph Battipaglia, marketing strategist at Stifel Nicholas in Yardley, Pennsylvania.
The Dow Jones industrial average declined 107.22 points, or 0.90 percent, at 11,786.47. The Standard & Poor's 500 Index was down 14.85 points, or 1.15 percent, at 1,278.21. The Nasdaq Composite Index was down 32.97 points, or 1.49 percent, at 2,179.52.
Earlier, the Dow was down more than 1 percent. Citigroup, meanwhile, forecast $9 billion in write-downs at US investment banks in the first-quarter, driven largely by leveraged loan and mortgage-related losses. Recession concerns hit shares of big manufacturers, including Boeing Co, which led the Dow's decliners with a drop of 2.1 percent to $74.98. General Motors Co fell 4.4 percent to $20.99.
Among gainers, shares of Dow component McDonald's Corp climbed 3.2 percent to $53.96 after the world's largest hamburger chain said sales at established stores jumped 11.7 percent globally in February. McDonald's was the Dow's top advancer at a time when only seven of the 30 Dow industrials were trading higher.