Stocks & Bonds: Financial Sector Fuels Downward Trend

Stocks fell for a third consecutive session on Monday, as investors dumped financial issues on fears of more credit losses and concerns that the economy might already be in recession.

The sell-off in financial stocks picked up speed after speculation circulated that Bear Stearns, the investment bank, was facing a cash shortage. The chairman of Bear’s executive committee, Alan C. Greenberg, called the speculation “totally ridiculous,” but shares of Bear Stearns still ended the day down $7.78 at $62.30.

Financial stocks were among the biggest drags on the market as the speculation about Bear Stearns strengthened the conviction that banks would report further deep credit losses for the quarter. Shares of Bank of America fell $1.43, to $35.31, while Citigroup slid $1.22, to $19.69.

Citigroup forecast $9 billion in write-downs at American investment banks in the first quarter, driven largely by leveraged loan and mortgage-related losses.

Adding to the market’s woes, gold futures and other metal prices sank, pulling down shares of mining companies like Freeport-McMoRan Copper and Gold, which fell $5.91, to $93.97. Material stocks were among the top decliners on the Standard & Poor’s index.

Crude oil for April delivery rose $2.75, to settle at $107.90 a barrel in New York trading. Futures earlier surged to $108.21 a barrel.

“There’s kind of an overhang of concerns about weakening U.S. economic conditions spreading globally,” said Frederic H. Dickson, a market strategist at D. A. Davidson & Company in Lake Oswego, Ore.

The Dow Jones industrial average tumbled 153.54 points, or 1.29 percent, to close at 11,740.15. The Standard & Poor’s 500-stock index lost 20 points, or 1.55 percent, to finish at 1,273.37. The Nasdaq composite index dropped 43.15 points, or 1.95 percent, to close at 2,169.34.

“I think what we’re seeing with the industrial companies is that there’s just more growing concern about the economic slowdown cutting into international industrial business,” Mr. Dickson said.

Recession concerns hit shares of big manufacturers, including the Boeing Company, which led the Dow’s decliners with a drop of $2.22, to $74.38.

The General Motors Corporation fell $1.07, to $20.89, after an analyst at Lehman Brothers said major automakers were at risk of being squeezed by both declining sales and rising commodity prices.

Monday was the third consecutive down day for the markets, which were sent reeling on Friday by a government report that employers had unexpectedly shed jobs at the steepest rate in nearly five years in February, confirming for many investors that the United States has entered a recession.

Among gainers, shares of McDonald’s, a Dow component, climbed $1.53 to $53.80 after the chain said sales at established stores jumped 11.7 percent globally in February.

Bond prices rose as stocks stumbled. The price of the benchmark 10-year Treasury note rose 20/32, to 100 12/32. Its yield, which moves opposite its price, fell to 3.45 percent, from 3.53 percent. The year on the five-year Treasury Inflation-Protected Securities, was 0 percent, as investors were concerned that the Fed might be unable to control rising prices.

Following are the results of Monday’s Treasury auction of three- and six-month bills:

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