AmEx, BofA Weigh on Dow

U.S. stocks continued to languish Monday afternoon, although they recovered some of their earlier declines as a drop in commodity-related names eased.

The Dow Jones Industrial Average was recently down about 45 points at 9775. Financial components American Express and Bank of America led the decline; American Express dropped 2.8%, while Bank of America slipped 1.9%.

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The S&P 500 fell 0.4% to 1064, weighed down by declines of about 0.6% in its energy and materials sectors, and a 0.5% drop in its financials category.

Both the Dow and the S&P were down more sharply just after the opening bell as a rebound in the dollar weighed on commodities prices and the shares of miners and oil companies.

The technology-heavy Nasdaq Composite, meanwhile, eked out a 0.2% gain to 2136. Among the gainers in the tech sector was Google, which rose 1.3% after Citigroup raised its third-quarter estimates for the Internet-search giant.

Many traders see Monday's weakness as a small pause from September's otherwise strong stock performance, after some expected a major pullback from the summer rally. Many still predict some sort of a pullback, but the expected size and impact seems to have shrunken.

Howard Ward, chief investment officer of growth equities for Gamco Investors, said while he does think stocks are due for a correction, he expects any pullback to be small. "I don't think it's going to change the primary direction of the market, which is higher," he said.

Alan Valdes, head of floor operations for Kabrik Trading in New York, said the general mood on the NYSE floor remains bullish, with many traders expecting a year-end rally fueled by hoarded cash.

"At the end of the day, guys are paid to manage money, not to have it sitting in a bank account earning less than 1%," Mr. Valdes said.

The front-month crude-oil future price tumbled $2.33, or 3.23%, to settle at $69.71 a barrel. Comex gold for September delivery declined $5.50 a troy ounce, or 0.54%, to $1003.70.

Jeff Grossman, a commodity trader at BRG Brokerage in New York, said there were renewed concerns about demand for oil and other energy products on Monday, though the dollar's rebound was by far the biggest catalyst driving prices.

Volume has been light Monday, with composite volume on the New York Stock Exchange around 3.7 billion shares recently. That puts the market on pace to fall shy of the daily average around six billion shares for 2009.

Among stocks in the news, Perot Systems soared 65% after Dell agreed to buy the technology-services provider for $3.9 billion. Dell shares fell 4%.

In the financial sector, Moody's fell more than 5% after its Moody's Investors Service ratings business was threatened with sanctions by New York and Illinois regulators for its initial decision not to attend a meeting of the National Association of Insurance Commissioners on Thursday. Moody's reversed that decision on Monday morning.

American International Group leapt 20% after a report from the Government Accountability Office said that the government's efforts since last year to prop up the insurer are helping to stabilize the company. In particular, AIG is making progress toward winding down its financial products division, the source of many of the bad credit bets that brought the company to its knees.

AIG also got a boost from reports that the House Oversight and Government Reform Committee had received a proposal from former CEO Maurice "Hank" Greenberg to restructure the terms of the government's bailout, cutting its stake in AIG to about 20% from 80%.

Lennar shares fell 3.4% after the home builder reported widening losses, but said it expects a return to profitability in fiscal 2010.

Treasury prices were mixed. The two-year note was up 1/32 to yield 0.992%. The 10-year note was down 5/32, yielding 3.486%.