Stocks Sink on Swine-Flu Fears

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Stocks fell on Monday as traders worried that the outbreak of swine flu could worsen the global economic outlook.

At 9:55 a.m., the Dow Jones Industrial Average was lower by about 38 points following an 80-point drop at open. The S&P 500 declined 0.6%, led by declines in its basic-materials, energy and financial sectors. The Nasdaq Composite Index declined 0.4%.

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• Day Ahead: Swine-Flu Fears Hit Markets

Swine flu has killed more than 100 people in Mexico and officials world-wide are taking measures to counteract the spread of the strain. Stock indexes around the globe declined, with Hong Kong's Hang Seng Index falling 2.7% and many major stock indexes in Europe sliding more than 1%.

Travel stocks, including airline and cruise-ship operators, declined, and shares of drug makers climbed. The health-care sector of the S&P 500 was up 0.2% in recent trading.

The threat of a flu pandemic rattled commodities traders, as crude-oil futures fell by nearly $3 to slide under $49 a barrel, and boosted the dollar and the yen in a fit of safe-haven buying in the currencies markets. Government debt prices also rose. The yield on the 10-year Treasury note dipped to about 2.96%; yields move inversely to prices.

Large multinational industrial companies like Caterpillar, as did oil companies including Exxon Mobil and tech giants such as Microsoft and Intel.

"This is going to hurt at a time when we've had a pickup [in equity markets]. On the other hand, it could just be an excuse for people to take money off the table," said David Morrison, a trader at GFT Global.

The worries followed a weekend G-7 meeting in which global financial leaders provided a sanguine outlook. "There are signs that the pace of deterioration in economic activity and trade flows has eased," said Treasury Secretary Timothy Geithner.

The financial components of the Dow industrials were under early pressure. Bank of America shares were up 0.4%. Earlier, the fell 2% after ex-Merrill Lynch CEO John Thain told The Wall Street Journal that the bank lied about its role in the controversial bonuses and losses at Merrill. Citigroup fell 1.6%.

General Motors was one of the morning's few bright spots, rising about 23% after the auto maker said it will cut another 21,000 hourly jobs and eliminate its Pontiac brand by the end of next year as part of a stepped-up restructuring plan. The company also unveiled the terms of a debt-for-equity exchange.