Reply #72: U.S. stocks sharply lower as crude makes gains

[Ghost Dog]

NEW YORK (MarketWatch) -- U.S. stocks on Monday were on the defensive as worries about the economy and the troubled financial system overtook any cheer over a rescue plan for mortgage giants Fannie Mae and Freddie Mac nearing enactment.

"I would refer to today as a death by a thousand cuts. It's not an event in particular but more of a reflection of concerns everywhere, especially in financials. It's all the concerns the market has had about the economy that is impacting stocks," said Peter Boockvar, equity strategist at Miller Tabak.

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The Senate on Saturday voted final congressional approval for the mortgage-relief measure that President Bush has signaled he would sign, but cheer over the pending legislation was offset by Friday's late seizure of two additional banks by federal regulators.

"I don't think many investors honestly believe that is actually going to make a difference. Every single thing the government has put in place has not worked, other than the government explicitly backing Fannie and Freddie, which is more relevant to Fannie and Freddie debt than it is to equities," said Boockvar.

Wall Street's tentative tone came as crude oil resumed its climb upward and ahead of economic reports due later in the week.

In New York Mercantile Exchange action, oil futures dipped after an earlier rebound after last week's sharp losses, with crude for September delivery lately off 93 cents at $123.80. Read Futures Movers.

"Crude is extremely oversold and we would be looking for a technical bounce with initial resistance at $128 and more significant supply at $133," said Marc Pado, U.S. market strategist at Cantor Fitzgerald.

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