NEW YORK (Reuters) - Bank shares weighed on Wall Street on Monday as Europe's smoldering debt crisis and fears of an insider trading probe in the United States sapped buying interest for most of the session.
Risk aversion kicked in as stocks followed the euro's fall against the U.S. dollar after turmoil in Ireland's fragile coalition government overshadowed an agreed-on bailout of the country.
Investors fear the crisis will spread throughout Europe, raising the specter of losses by exposed U.S. banks. The KBW bank index .BKX lost 1.5 percent and Dow component JPMorgan Chase & Co (JPM.N) fell 2.3 percent to $38.51.
"All the continued concerns coming out of Europe and the debt situation there is what got us started on the way down today," said Tom Schrader, managing director of U.S. equity trading at Stifel Nicolaus Capital Markets in Baltimore.
Worry about a broad insider trading probe in the United States hit shares of large brokerages and Goldman Sachs Group (GS.N) fell 3.4 percent to $161.05.
"The situation on insider trading put some more fuel on the fire for short-term trading in the afternoon," said Schrader, who added the concerns were "probably a gross over-reaction" to the insider trading probe.
The Dow Jones industrial average .DJI fell 24.97 points, or 0.22 percent, to 11,178.58. The Standard & Poor's 500 Index .SPX dipped 1.89 points, or 0.16 percent, to 1,197.84. But the Nasdaq Composite Index .IXIC gained 13.90 points, or 0.55 percent, to 2,532.02.
Ireland's unpopular coalition government began to crumble a day after agreeing on an European Union/International Monetary Fund bailout, casting doubt on its ability to push through an austerity budget crucial to receiving assistance.
Shares of health insurers outperformed the broader market after new rules aimed at ensuring more customer dollars go toward medical care were finalized on Monday, ending a source of uncertainty for investors in the sector.
Humana Inc (HUM.N) rose 4.1 percent to $58.34 and Coventry Health Care CVH.N added 3.1 percent to $26.58. The Morgan Stanley healthcare payor index .HMO gained 1.6 percent.
The S&P energy index .GSPE bounced from a more than 2.2 percent decline to close down 0.4 percent after U.S. light crude futures capped losses, trading at $81.72 per barrel after earlier falling below $81.
After the closing bell, Hewlett-Packard Co (HPQ.N) raised its fiscal 2011 revenue and earnings forecasts after solid computer and storage sales led to stronger-than-expected quarterly results.
HP shares added 1.9 percent to $44.07 in extended trading after rising 1.8 percent to close at $43.25 during normal market hours.
In the regular session, chipmaker SanDisk gained 6.5 percent to $42.57 after Robert W. Baird upgraded the stock to "outperform" from "neutral," while Amkor jumped 6 percent to $6.86 and Teradyne added 5.7 percent to $12.53 after Citigroup raised its rating on both shares.
The PHLX Semiconductor Index .SOX added 1.1 percent to close at 391.33.
Leadership from semiconductors may find a near-term hurdle as the SOX index approaches the 395 area, a six-month high hit earlier this month. The index's 2010 high, near 405, was touched in late April.
With relative momentum and strength readings near overbought levels, a pullback in the sector is in the charts. However, the uptrend that has seen the SOX rise more than 28 percent from a low set in late August is still in place.
Also boosting the Nasdaq, Netflix Inc (NFLX.O) jumped 8.8 percent to $188.32 after it said it will offer an unlimited streaming-only subscription plan in the United States and it raised prices in some of its plans.
About 7.07 billion shares traded on the New York Stock Exchange, the American Stock Exchange and the Nasdaq, below the year-to-date average of 8.69 billion.
Advancing stocks slightly outnumbered declining ones on the NYSE by 1,520 to 1,453, while on the Nasdaq, 1,336 stocks rose and 1,303 fell.
Reporting by Rodrigo Campos; Editing by Jan Paschal