NEW YORK — Investors fixated on the faltering economy brushed off the type of merger news that normally starts rallies.
Wall Street fell more than 1 percent Monday as uneasiness about the economy eclipsed a bounce in troubled financial stocks and news of a big drug-company merger. Stocks rose in the early going but turned lower in a now-familiar pattern where short- lived bursts of optimism give way to concerns about economic woes.
Financial stocks rose on a news report that Bank of America could raise capital in the private sector. Shares of major banks have been pummeled to multiyear lows amid growing concern that they don’t have enough cash to cover future losses despite multiple government rescues.
“Any bank right now that can raise money in the private sector, that is a major positive for the market,” said Quincy Krosby, chief investment strategist at The Hartford. “It’s another way to raise capital rather than the government infusing capital into the banks.”
But remarks from billionaire investor Warren Buffett added to an overall mood of dejection. He said during an appearance on CNBC that the economy had “fallen off a cliff” over the past six months.
Investors even wrote off rare dealmaking as moves made more from necessity than opportunity as drugmakers Merck & Co. and Schering- Plough announced plans to combine in a $41 billion deal.
“Any type of news we get, the market is just skeptical,” said Jon Biele, head of capital markets at Cowen & Co. “There is nothing in the near term that is going to ratchet us to a different higher level.”
The Dow fell 79.89, or 1.2 percent, to 6,547.05.
The Standard & Poor’s 500 index fell 6.85, or 1 percent, to 676.53, while the Nasdaq composite index fell 25.21, or 2 percent, to 1,268.64.
The Dow and the S&P 500 have fallen more than 25 percent this year. The Dow is at its lowest level since the spring of 1997, and the S&P 500 is at its lowest point since the fall of 1996. The Nasdaq, meanwhile, is at a six-year low.
“There is really not very much for the market to sink its teeth into,” said Steve Sachs, director of trading at Rockville, Md.-based Rydex Investments.
In the global descent into recession, Japan continues to lead the way. Japan’s Nikkei stock average fell 1.2 percent to a 26-year low. Plunging exports — down by a record 46.3 percent in January as sales of cars, electronics and machinery continued to sputter — pushed Japan’s current account deficit to a record monthly high, the government said Monday.
The Japanese economy shrank last year by 12.7 percent.
Elsewhere, Hong Kong’s Hang Seng dropped 4.8 percent. Britain’s FTSE 100, Germany’s DAX and France’s CAC-40 moved marginally.
