Trade Tensions Damp Stocks

Stocks weakened as investors went back on the defensive following last week's gains and a trade row between the U.S. and China.

The Dow Jones Industrial Average was recently down 26 points, or 0.3%, at 9579.19. Boeing and United Technologies were the biggest contributors to the Dow's point loss, off about 0.7% each. All the blue-chip financials traded lower as well, led by a 1.8% decline in Bank of America.

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A pullback in overseas markets set a gloomy tone prior to the open in the U.S. Traders were spooked by a budding trade dispute between the U.S. and China, which said it would restrict imports of American chicken and auto products. Previously, the U.S. had penalized imports of tires made in China.

Shares of U.S. tire makers rallied in response to the move. Cooper Tire & Rubber shares were up 10.4%, while Goodyear Tire & Rubber gained 4.2%.

U.S. investors on Monday are also reversing some of the bets made last week, when the dollar tumbled and stocks rallied, including a 164-point weekly gain in the Dow. Last week's trading reflected a somewhat improved appetite for risk, though many traders and analysts say it remains to be seen whether that trend will last considering the lingering effects of the global recession.

Other stock indexes were weak. The Nasdaq Composite Index fell 0.4%. The S&P 500 fell 0.5%, led by a 1.2% decline in its financial sector. All the broad measure's other categories posted losses as well, except utilities, up 0.4%, and health care, up 0.3%. Both are traditional safe-haven bets.

Among stocks to watch, shares of E-Trade Financialrose 4.2% after a Citigroup analyst upgraded the online broker to buy from hold.

In Asia, most markets lost ground. The Nikkei tumbled 2.3%. Hong Kong's Hang Seng ended 1.1% lower at 20932.20, while Australia's S&P/ASX 200 fell 1.4% and South Korea's Kospi dropped 1%. Major benchmarks in Europe also fell.

The dollar was mixed. One euro cost $1.4612, up from $1.4582 late Friday. One dollar fetched 90.73 Japanese yen, up from 90.65 yen. Treasury prices slipped. The 10-year note was down 8/32 to yield 3.376%. The 30-year bond fell 10/32 to yield 4.200%.