By KEN SWEETAP Markets Writer
NEW YORK (AP) - The stock market moved toward a fourth day of declines Monday as worries about the recent rise in bond yields outweighed strength in the technology sector. Banking stocks also dragged down the broader market.
The Dow Jones industrial average was down 43 points, or 0.3 percent, to 15,038 in late afternoon trading. The Standard & Poor's 500 index lost 6 points, or 0.4 percent, to 1,649. The market fell broadly; 4 stocks fell for every one that rose on the New York Stock Exchange.
Intel rose the most in the Dow after the stock was upgraded by PiperJaffray. The investment bank raised its rating on the stock, predicting strong sales for chips used in tablet computers and mobile devices. Intel rose 60 cents, or 2.7 percent, to $22.50.
The technology-heavy Nasdaq composite index was effectively flat, down a point, or less than 0.1 percent, to 3,602.
Other major tech stocks also rose. Apple rose $9.76, or 1.9 percent, to $511.90 and Google rose $12.28, or 1.4 percent, to $869.70.
Banking shares moved lower after a report from the Federal Reserve appeared to indicate that large bank holding companies -- firms such as JPMorgan Chase & Co., Citigroup, Bank of America and others -- could need to raise additional capital.
In the report, the central bank said large banks had made "substantial improvements" in how they plan for future potential financial crises; however the Fed said there was "considerable room for advancement."
JPMorgan fell $1.13, or 2.1 percent, to $52.16 while Bank of America fell 21 cents, or 1.5 percent, to $14.21. Morgan Stanley fell 52 cents, or 2 percent, to $25.95.
Banks have faced intense regulatory pressure to increase their capital ratios -- the amount of money they hold in reserve -- since the financial crisis five years ago. Several banks that failed, including Washington Mutual, Lehman Brothers and Bear Stearns, were criticized for not holding enough capital to protect their balance sheets from the losses stemming from those bad mortgages.
The main long-term focus for many investors was the rapid rise in bond yields. The yield on the benchmark 10-year Treasury note rose to 2.89 percent from 2.83 percent Friday.
The yield is the highest it's been since July 2011. It has been rising sharply from its recent low of 1.63 percent reached in early May as the economy improves and as investors anticipate an end to the Federal Reserve's huge bond-buying program.
The quick rise in bond yields has worried some investors because it leads to higher interest rates on many kinds of loans, including home mortgages and corporate loans.
"I do think we're not too far away from that point in time where this heavy increase in bond yields is going to start impacting the (stock) markets," said Doug Peebles, chief investment officer of AllianceBernstein Fixed Income.
Some investors expect the 10-year note could rise above the psychologically important 3 percent mark as early as month's end.
The Dow is coming off its worst week this year. The benchmark index fell 2.2 percent last week and the S&P 500 lost 2.1 percent. Investors have been focused on the possibility that the Federal Reserve may pare back its bond purchases as early as next month. The program has been keeping interest rates low to encourage borrowing and hiring.
"We've been in this artificially low interest rate environment for so long, it's hard to figure out what 'normal' is," said Jim Dunigan, chief investment officer with PNC Wealth Management.
More news from the Fed is coming up this week. On Wednesday the Federal Reserve will publish the minutes of its July policy meeting, and on Thursday the Fed starts its annual conference in Jackson Hole, Wyo.
Dunigan said the recent rise in bond yields might be temporary as the market waits for the Fed's next policy meeting Sept. 17-18. "We expected interest rates would rise with this improving economy," he said.
A rout for retailers continued Monday. Saks, the luxury retailer, reported a wider loss two weeks after agreeing to be bought by the Canadian retailer Hudson's Bay, the parent company of Lord & Taylor, for $2.4 billion.
The retail sector got off to a dismal start last week after Wal-Mart, Macy's and Nordstrom cut their sales outlooks for the year. This week, J.C. Penney, Target, the Gap, Home Depot, Sears and others report quarterly earnings. The retail industry is often closely watched by investors because consumer spending makes up a large chunk of the U.S. economy.
Among other stocks making big moves:
- Zillow said it was buying New York-focused real estate website StreetEasy for $50 million. Zillow dropped $5.92, or 6.5 percent, to $85.30.
- Dollar General rose $1.76, or 3.4 percent, to $54.23, the biggest gain in the S&P 500. Analysts at JPMorgan Chase upgraded the stock to "overweight" from "neutral" and raised their price target to $64 from $51, citing signs that sales and profit margins were improving.
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