NEW YORK (Reuters) - The Dow industrials eased on Monday as falling oil prices hurt energy shares and a brokerage raised concerns about Coca-Cola and PepsiCo, blunting a rise in financial stocks on hopes a bailout will spare shareholders.
Anxious traders awaited news of the government’s bank rescue plan after its announcement by Treasury Secretary Timothy Geithner was postponed by one day until Tuesday.
At the same time, a $827 billion economic stimulus package faced hurdles in the Senate. A version of the package has already been approved in the House of Representatives, without a single Republican vote.
“Everyone’s waiting for Geithner tomorrow,” said Steven Masocca, managing director at Wedbush Morgan in San Francisco. “Expectations are raised or as high as they can be — it may be a bit anti-climatic because a lot of the details have already leaked out.”
The Dow Jones industrial average .DJI fell 9.72 points, or 0.12 percent, to 8,270.87. The Standard & Poor's 500 Index .SPX added 1.29 points, or 0.15 percent, to 869.89. The Nasdaq Composite Index .IXIC slipped 0.15 points, or 0.01 percent, to 1,591.56.
The Dow is up 3.4 percent so far this month but is down 5.8 percent year-to-date.
Uncertainty regarding the bank rescue has shaken financial shares, pushing them down nearly 21 percent year-to-date on fears that the government would be forced to nationalize some banks. Those fears have now been easing on expectations the Obama administration’s rescue plan will focus on getting private investors to buy up bad debts.
Even though the S&P financial index .GSPF rose 1.3 percent on Monday, the ability of the sector as a whole to impact the market has been greatly diminished because flagging stock prices of financial companies have cut their market caps, reducing their weight on the overall market.
In after-hours trading, Principal Financial Group Inc PFG.N, a life and health insurer, fell over 20 percent after it posted a fourth-quarter loss, hurt by write-downs on investments.
Shares of leading soft drink makers Coca-Cola Co (KO.N) and PepsiCo PEP.N fell after broker downgrades and reductions on the companies’ share price targets.
Further pressuring Coke was news that Australasian brewer Lion Nathan Ltd LNN.AX dropped a $4.9 billion bid for Australian soft drinks company Coca-Cola Amatil Ltd (CCL.AX), whose main shareholder is Coca-Cola Co, after talks between the two companies broke down over conditions.
Coca-Cola dropped 2.9 percent to $42.06, making it the biggest weight on the Dow, while PepsiCo slid 3.9 percent to $51.43.
Oil prices fell below $40 a barrel in a late sell-off on Monday, dragging ExxonMobil (XOM.N) down 1.1 percent to $79.48.
General Electric <GE.N was one of the positive performers among blue-chips, adding 13.9 percent to $12.64 on hopes its financial arm, General Electric Capital Corp will benefit from the bank bailout. The advance pushed the S&P Industrial index .GSPI up 2.6 percent, making it the best-performing sector in the S&P 500. GE shares rose for a second straight day after six consecutive sessions of declines.
On Nasdaq, shares of Apple (AAPL.O) rose 2.8 percent to $102.51 after a broker upgrade, countering a decline in Microsoft (MSFT.O), which fell on some profit taking following last week’s advance. Microsoft shares slid 1.1 percent to $19.44 after gaining more than 14 percent the previous week.
Also on the down side, shares of NYSE Euronext NYX.N, operator of the New York Stock Exchange, fell 5.2 percent to $21.71 after it reported a quarterly loss as it took a $1.59 billion charge to write down the value of its transatlantic merger.
Editing by Leslie Adler