* Home buyer tax credit fears hurt financials, builders
* Commodity shares retreat amid U.S. dollar's bounce
* Dow off 1.1 pct; S&P off 1.2 pct; Nasdaq off 0.6 pct
* For up-to-the-minute market news, click []
(Adds volume)
By Ellis Mnyandu
NEW YORK, Oct 26 (Reuters) - U.S. stocks fell for a second
straight session on Monday as investors ditched home builders
and financials on fears that a federal home buyer tax credit
might be phased out, while commodity shares succumbed to
pressure from the higher U.S. dollar.
Trading was choppy. Stocks initially started on firmer
footing, with indexes up more than 1 percent shortly after the
open, but the bounce quickly faded as the U.S. dollar
rebounded and investors fretted about the financial sector's
prospects.
An economic research firm, ISI Group, said in a Monday
note there could be an agreement to phase out the home buyer
tax credit over 13 months, rather than expand it, as some had
hoped. For details, see []
JPMorgan <JPM.N>, down 3.1 percent at $43.82, was among
the top drags, along with Bank of America <BAC.N>, down 5.1
percent at $15.40. The S&P financial index <.GSPF> slipped 2.5
percent, while the Dow Jones U.S. home construction index
<.DJUSHB> declined 3.4 percent.
"It's a tough sell now to Congress to say we need another
extension of the home buyer tax credit when supposedly we are
out of the recession, according to economists, and housing is
doing well again," said Joe Saluzzi, co-manager of trading at
Themis Trading in Chatham, New Jersey. "If they are talking
more of a phase-out than an extension, that certainly will
hurt the market."
Without the home buyer credit, investors worry that the
struggling housing market might lose a crucial incentive that
has spurred hopes of stabilization in recent months.
The Dow Jones industrial average <> dropped 104.22
points, or 1.05 percent, to 9,867.96. The Standard & Poor's
500 Index <.SPX> shed 12.65 points, or 1.17 percent, to
1,066.95. The Nasdaq Composite Index <> fell 12.62
points, or 0.59 percent, to 2,141.85.
The S&P 500 is now up 57.7 percent from the 12-year
closing low of March 9, having slipped from its recovery peak
when it was up 62.3 percent from that low.
Financials also came under pressure from the news that
Dutch banking, insurance and asset management company ING
<ING.AS><ING.N> will split in two as part of a plan to pay
back government bailout funds and return to its retail savings
bank roots. For details, see []
That plan might set a precedent for some of the U.S.
institutions that received federal government bailout funds,
said Marc Pado, U.S. market strategist at Cantor Fitzgerald &
Co in San Francisco.
"If the banks are going to focus on mainly repaying the
government, they are not going to lend, they are going to cut
back on mortgages, and make it even stricter to get a
mortgage," he said. "It's the domino effect and that hurts the
home builders."
Among home builders' shares, luxury home builder Toll
Brothers <TOL.N> slumped 4.2 percent to $18.36 and those of
No. 3 U.S. homebuilder Lennar Corp <LEN.N> shed 4 percent to
$13.57. Beazer Home <BZH.N>, the ninth-largest U.S. home
builder, declined 4.4 percent to $4.83.
The CBOE Volatility index <.VIX> ended up 9.2 percent, its
biggest one-day percentage gain in a month. During the
session, the VIX rose as much as 11.6 percent, which marked
its biggest intraday percentage jump in nearly two months.
The U.S. dollar rallied from a 14-month low against the
euro as falling stock and commodity prices dampened risk
appetite, prompting investors to lock in recent gains in other
currencies.
The dollar's rise pressured commodity prices, which hurt
shares of natural resource companies. Chevron Corp <CVX.N>,
due to post quarterly results this week, ended down 1.6
percent at $75.45.
On the bright side, RadioShack Corp <RSH.N> soared to a
13-month high after the electronics chain reported quarterly
revenue above Wall Street's forecasts. The stock shot up 15.9
percent to $18.15. []
Volume was moderate on the New York Stock Exchange, with
about 1.39 billion shares changing hands, below last year's
estimated daily average of 1.49 billion. On the Nasdaq, about
2.34 billion shares traded, slightly above last year's daily
average of 2.28 billion.
Declining stocks outnumbered advancing ones on the NYSE by
a ratio of more than 3 to 1, while on the Nasdaq, more than
two stocks fell for every one that rose.
(Editing by Jan Paschal)
