NEW YORK — Wall Street pulled back for the first time in five days Monday as investors worried about balance sheets at banks and the quarterly results that businesses will start releasing this week.
Investors were also disappointed that talks for IBM’s $7 billion deal to buy Sun Microsystems had stalled — a sign that the market is still not ready to support big mergers.
Financial shares sold off after a prominent analyst predicted more losses at banks and said the government’s efforts to prop up the ailing industry might not be as effective as hoped. Michael Mayo issued “sell” ratings on several banks and said in his report that loan losses could exceed those of the Great Depression.
The market was already on edge about the coming parade of first-quarter results, which kicks off today with aluminum producer and Dow component Alcoa. Worse-than-expected reports could upset the market’s recent advance, which brought stocks up more than 20 percent from early March, when they hit their lowest levels in 12 years.
“You have some skittishness in the market,” said Len Blum of Westwood Capital. “We have earnings season up ahead, and it’s very difficult to predict what that is going to do.”
The Dow Jones industrials fell 41.74, or 0.5 percent, to 7,975.85 after being down as much as 155 points. The Standard & Poor’s 500 index fell 7.02, or 0.8 percent, to 835.48, while the Nasdaq composite index fell 15.16, or 0.9 percent, to 1,606.71.
Technology stocks were lower following the IBM-Sun news.
A jump in stocks of defense contractors helped the market pull off its lows. Defense Secretary Robert Gates recommended halting production of the F-22 fighter jet as he outlined deep cuts to many of the military’s biggest weapons programs but pointed to spending increasing in other areas. Lockheed Martin jumped $5.97, or 8.9 percent, to $73.28, while Northrop Grumman rose $3.96, or 9 percent, to $47.94.
Ford jumped 52 cents, or 16 percent, to $3.77 after the company said it retired debt that would reduce what it owed by 38 percent and save millions of dollars in interest costs.
