* Banks, industrials slip following March jobs data
* China's PPI drops, raising worries about slowing demand
* AOL shares soar on Microsoft patents deal
* Dow off 1 pct, S&P down 1.1 pct, Nasdaq off 1.1 pct
By Ryan Vlastelica
NEW YORK, April 9 The Dow and the S&P 500
extended losses to a fourth day on Monday, as investors took
their cues from last week's disappointing jobs report, which
raised fresh concerns about the U.S. economy's recovery.
Despite Monday's declines, the Dow industrials and the S&P
500 ended above their session lows. But trading has been choppy
in recent weeks, with a series of gains interrupted by a few
days of losses.
Banks and industrials led the S&P 500's slide, with the S&P
financial sector index and the S&P industrial sector
index each down 1.6 percent. The two sectors are closely
tied to the prospects for economic growth.
The latest jobs figures added to a series of
weaker-than-expected indicators, which have taken the edge off a
strong multi-month rally.
The CBOE Volatility Index or VIX jumped 12.63 percent
on Monday to end at 18.81. The VIX is up about 21.4 percent so
far in April.
"We're coming off a period of very high optimism, which is
often problematic even when the fundamental news isn't
disappointing," said Bruce McCain, chief investment strategist
of Key Private Bank in Cleveland, Ohio.
"The jobs report is a cautionary note that we haven't seen
the last of disappointing news, suggesting there is probably a
good stiff correction in our future, one tougher than an average
Stocks have rallied sharply in recent months, with the S&P
500 climbing nearly 30 percent from its early October closing
low to end at nearly a four-year high a week ago.
Volume was extremely light, with about 5.52 billion shares
traded on the New York Stock Exchange, the American Stock
Exchange and the Nasdaq, well below last year's daily average of
The S&P 500 slid on Monday to a session low at 1,378.24, its
lowest point in more than three weeks. But the benchmark index
recovered some of that lost ground in afternoon trading and held
well above its 50-day moving average near 1,371.
In addition to the U.S. jobs figures released last week,
China's surprisingly soft producer prices data sparked concerns
about waning demand in the world's second-largest economy. The
country's March PPI data reinforced expectations that a cooling
economy has eclipsed inflation as the Chinese government's
biggest near-term worry.
The Dow Jones industrial average fell 130.55 points,
or 1.00 percent, to end at 12,929.59. The Standard & Poor's 500
Index slid 15.88 points, or 1.14 percent, to 1,382.20.
The Nasdaq Composite Index dropped 33.42 points, or 1.08
percent, to close at 3,047.08.
U.S. non-farm payrolls added 120,000 jobs in March, far
below the forecast gain of 203,000 jobs, according to Labor
Department data released on Friday, a market holiday. The U.S.
unemployment rate slipped to 8.2 percent in March from
February's 8.3 percent.
The payrolls report cast doubts on the United States'
ability to help bolster the global economy as Europe's debt
crisis resurfaces and worries remain whether China's economy
will avoid a hard landing. But at the same time, it renewed
hopes for more monetary stimulus from the Federal Reserve.
AOL surged 43.3 percent to close at $26.40, touching
a lifetime high of $27.47 earlier in the session after the
Internet company said it would sell more than 800 of its patents
and related applications to Microsoft, and grant
Microsoft a non-exclusive license to patents it retains for
slightly over $1 billion in cash.
Microsoft, a Dow component, lost 1.3 percent to $31.10.
Following last week's modest losses, the S&P 500's key
near-term support levels were 1,375 to 1,380, which were its
resistance levels in late February, said Scott Davies, an
analyst at Brown Brothers Harriman & Co in New York.
Earnings will come to the fore this week, with bellwethers
Google Inc and JPMorgan Chase & Co scheduled to
report results. Alcoa will be the first Dow component to
report results, with earnings due after Tuesday's closing bell.
Molina Healthcare Inc shares plunged 26.7 percent to
$25.65 after the health insurer said its Medicaid contract in
Ohio would not be renewed.