Energy & banks weigh down the Dow

Stocks retreated on bearish news for energy & financials. Major decliners (down more than 1 in the Dow were: Citigroup (C), Bank of America (BAC), JP Morgan (JPM), Exxon (XOM), Chevron (CVX) & Caterpillar (CAT). OK, there was one industrial in there. Dow fell 125, decliners over advancers 3½ to 1 & NAZ declined 32.

This is the start of earnings season & thoughts of reality are in the minds of traders. Lower oil prices & what could be another terrible reporting period for financials is weighing heavily on the stocks. Banks were hit hard as S&P 500 FINANCIALS INDEX looks like it's heading for its recent lows. Less than 2 years ago this index was at 500:

Value 146.91

Change -8.88

% Change -5.7%

Oil fell sharply on greater worries about demand destruction from the global recession.

CLG09.NYM

..Crude Oil Feb 09

...37.72

.. 3.11 ......(7.6%)

The Alerian MLP Index (energy related) dropped 4, the Dow Jones REIT Index dropped 8, Barclays Capital High Yield Bond fell 1% (losing a few of its recent new friends) while the VIX was up 3¼ (fear is on the rise).

Citigroup (C), a Dow stock, is trying to sell most of its brokerage business to Morgan Stanley (MS), but traders were not impressed. C dropped 1.15, it's a $5 stock once again.

• Citi shares plunge 18 percent despite talks with Morgan- AP

A sense of reality is biting traders hard. Earnings reports may pinch stocks. The stimulus package is in the wind & it already has critics from both parties. One safe bet, it will be close to $1T requiring gov to borrow substantially more.