Wall Street extends decline, closes under 13,000

NEW YORK -- Wall Street ratcheted its way through a fractious session Monday before finally closing lower on expectations of further fallout from the ongoing credit crisis. The Dow Jones industrials, up more than 100 points during the day, ended below 13,000 for the first time since August.

Stocks lost ground for the fourth straight session. Analysts said investors had few reasons to sustain a rally, even with many stocks at enticingly low prices after recent routs. The Nasdaq composite index was the biggest decliner among the major indexes as investors sold technology stocks.

News stories kept the subprime contagion in focus. Late Friday, E-Trade Financial Corp. said the value of its mortgage-backed securities has fallen significantly and that it will need to take bigger-than-expected write-downs in the fourth quarter.

Meanwhile, troubled home lender Countrywide Financial Corp. said in a U.S. regulatory filing it could be "severely" limited if its credit rating drops into junk status.

"The problem is just the mood of the market," said Peter Cardillo, chief market economist at Avalon Partners, said of Wall Street. "There is a tense feeling that there will be still more problems with the subprime situation and a fear that things are going to get worse rather than better."

Selling was especially strong in technology stocks as more investors succumbed to the view that the sector is not strong enough to provide the economy with a cushion against the weakness in housing. Apple Inc. fell more than 7 percent after analysts described the weekend European launch of the iPhone as disappointing.

The Dow fell 55.19, or 0.42 percent, to 12,987.55, after falling 4.06 percent last week.

The last time the Dow traded below 13,000 was on Aug. 17, when it index hit a low of 12,847.24, and the last time it closed below 13,000 was on Aug. 16, when it ended at 12,845.78.