Sam Collins

Looking for a Leader

by Sam Collins   05/12/09

With no economic reports to offset profit taking, stocks pulled back Monday on a broad front. But since the financials had the biggest sector move last week and many of the banks announced selling stock to raise capital to pay off the government's TARP loans, the group was hit with a 6.8% decline.

Common equity offerings were announced by Wells Fargo (WFC), BB&T (BBT), Capital One (COF), KeyCorp (KEY), and U.S. Bancorp (USB). Of the banks, the regionals took the biggest hit, down 8.5%, as several in addition to BB&T announced plans to raise capital.

In the financial sector insurance companies took it on the chin with life and health insurers down 10.5% and this due to the impending debate on healthcare reform and the possibility of some form of government-sponsored national healthcare plan.

Telecom stocks were the only sector to show a broad advance. AT&T (T), up 0.44%, and Verizon (VZ) agreed on a deal to sell each other various wireless assets in the billions of dollars.

At the close, the Dow Industrials (DJI) were off 156 points, closing at 8,419. The S&P 500 (SPX) fell 20 points to 909, and the Nasdaq (NASD) was off eight points to 1,731.

Volume fell sharply on the decline: The New York Stock Exchange traded just 1.5 billion shares and the Nasdaq traded 789 million shares. Decliners were ahead of advancers by 2.5-to-1 on the Big Board and by 1.5-to-1 on Nasdaq.

The June crude oil contract closed at $58.50 a barrel, off 13 cents, and the Amex Energy SPDR (XLE) fell $1.58 to $50.26.

The June gold contract fell $1.40 to $913.50 an ounce, and the PHLX Gold/Silver Index (XAU) lost $1.42, closing at $136.87.