* Banks fall on negative comments from analyst, Soros
* Sun Micro, IBM talks said to break down
* Goldman Sachs downgrades Cisco
* Dow off 1.7 pct, S&P 500 off 2.1, Nasdaq down 2.3
* For up-to-the-minute market news click []
(Updates to midday, changes byline)
By Edward Krudy
NEW YORK, April 6 (Reuters) - U.S. stocks slid on Monday,
as a prominent analyst warned the bank sector's problems still
have further to run and the potential collapse of a takeover of
Sun Microsystems hurt sentiment in the technology sector.
Bank shares stumbled after veteran analyst Mike Mayo, of
Calyon Securities, cited the ongoing consequences of
risk-taking by banks and warned of rising loan losses by the
end of 2010. He rated a number of big and regional banks at
"underperform" or "sell." For more, see []
The renewed worries about banks came on the heels of a
four-day rally and dealt a major setback to the market's
attempted recovery from 12-year lows hit early last month.
Among financials shares, JPMorgan <JPM.N> tumbled 3
percent, while Wells Fargo <WFC.N> dropped 6 percent. The KBW
Bank index <.BKX> fell more than 4 percent.
"There were a lot of downgrades this morning of some key
names, significant stocks that are on a lot of people's watch
list," said Cleveland Rueckert, market analyst at Birinyi
Associates in Stamford, Connecticut.
"We've got a market that is very overbought and a lot of
the sectors are at the top end of the rages that we track -- it
really didn't take much to get people selling."
The Dow Jones industrial average <> dropped 136.12
points, or 1.70 percent, to 7,881.47. The Standard & Poor's 500
Index <.SPX> fell 17.46 points, or 2.07 percent, to 825.04. The
Nasdaq Composite Index <> lost 36.54 points, or 2.25
percent, to 1,585.33.
Adding to the negative tone were comments from billionaire
investor George Soros that the U.S. economy was in for "a
lasting slowdown" and that it wouldn't recover in 2009. He also
said the "banking system as a whole is basically insolvent."
Shares of Sun Microsystems Inc. <JAVA.O> tumbled 23.4
percent to $6.50 after a source with knowledge of the matter
told Reuters that talks with IBM <IBM.N> to acquire its smaller
rival broke down. [] IBM slid 1.2 percent to
$101.04 and was among the top drags on the Dow.
"Talk about the banks and canceled deals aren't good
either. Tech was performing and you don't want to hear anything
bad out of there," said Frank Lesh, futures analyst and broker
at FuturePath Trading LLC in Chicago.
Shares of big manufacturers, whose fortunes are closely
linked to the economic cycle, featured among the top drags,
with Caterpillar <CAT.N> down nearly 6 percent to $30.24.
A drop in oil prices hit energy shares, with Exxon Mobil
<XOM.N> down 1.4 percent to $69.42. U.S. front month crude fell
3.8 percent to $50.51 per barrel.
The S&P 500, since hitting a bear market closing low on
March 9, is up 22 percent, partly on hopes that the economic
slump was abating and banks were stabilizing.
The recent momentum in financials and sectors such as
technology, which analysts say may lead a recovery, helped the
market notch a fourth straight weekly advance at the end of
last week, making it best four weeks for Dow since 1933.
The KBW Bank index fell 4.7 percent, while Citigroup <C.N>
shed 4.2 percent to $2.73 and Bank of America <BAC.N> was down
1.7 percent to $7.47.
Cisco Systems <CSCO.O> shares slid 4.9 percent to $17.27
and was one of the top weights on the Nasdaq after Goldman
Sachs cut the stock to a "neutral" rating and removed it from
the firm's "Conviction Buy" list. []
(Additional reporting by Charles Mikolajczak; Editing by
Leslie Adler)
