NEW YORK—U.S. stocks fell Monday as credit market concerns sent financial and housing-related shares lower, outweighing the positive impact of a strong start to the holiday shopping season.
In the latest sign of trouble in housing, Freddie Mac and Fannie Mae fell sharply after UBS downgraded the mortgage finance companies, citing increased mortgage losses and erosion of their other home-loan investments.
Stocks rallied on Friday as consumers, many of whom hit the stores before dawn, stormed malls and shopping centers. Retail sales nationwide rose 8.3 percent the day after Thanksgiving compared with a year ago, according to the National Retail Sales Estimate from ShopperTrak.
"It's like a hangover," said Joseph Battipaglia, market strategist at Stifel Nicolaus in Philadelphia. "We had a bout of partying over the holiday, and now we're right back to the same worries with the financial services and housing recession."
The Dow Jones industrial average was down 49.42 points, or 0.38 percent, at 12,931.46. The Standard & Poor's 500 Index was down 9.77 points, or 0.68 percent, at 1,430.93. The Nasdaq Composite Index was down 11.88 points, or 0.46 percent, at 2,584.72.
Fannie shares dropped 7.4 percent to $29.80 and Freddie shares fell 5.1 percent to $25.09.
Investment banks were also down after Goldman Sachs said HSBC, Europe's biggest bank, would likely need a further $12 billion in provisions for its U.S. subprime mortgage and home equity loans.
HSBC on Monday provided up to $35 billion to support its two structured investment vehicles. SIVs have been battered by the recent subprime-related credit turmoil.
Some of the heaviest decliners were shares of Citigroup , down 2.3 percent to $30.96 and Morgan Stanley, down 1.7 percent to $49.05.
Shares of Amazon.com were among the top gainers on Nasdaq. The Monday following Thanksgiving is known as "Cyber Monday" when many employees returning to work go on-line to buy gifts.
Shares of Amazon.com rose 2.8 percent to $83.65. Shares of Garmin, a maker of navigational devices seen as hot items on holiday wish lists, were up 8 percent to $99.24.
The Dow Jones home builder index was down 3.1 percent after Citigroup analysts cut shares of seven companies in the sector. Year-to-date, the industry is down about 60 percent.
Among the biggest decliners in the group were shares of Centex, down 4.1 percent to $19.14 and KB Home, down 3.6 percent to $20.92.
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