Freddie, Fannie Concerns Spark Finance Sector Sell-Off

New York, NY (AHN) - All three major indices fell Monday as concerns arose again that the government may need to bail out Freddie Mac and Fannie Mae, sparking a sell-off in the financial sector.

An article out of Barron's said that the mortgage giants may need the U.S. Treasury to bail them out. The news fueled a large sell-off in both companies, with their stocks falling more than 20 percent, reaching levels not seen in nearly two decades.

Decliners outpaced advancers by a 3 to 1 margin on the New York Stock Exchange on relatively light volume.

The Dow Jones Industrial average fell 180 points or 1.5 percent as all 30 components finished Monday lower. General Motors was the weakest of the group, down 7.3 percent after the automaker announced it will offer employee discount pricing to the general public until January in an effort to boost sales.

The S&P 500 shed nearly 20 points or 1.5 percent as all nine of 10 major economic sectors finished Monday lower. The financial sector was the biggest laggard, down 3.6 percent on the session.

Strong of late, the tech sector saw some profit taking as the Nasdaq Composite fell 35 points or 1.45 percent. The semiconductor index fell 1.7 percent and the big cap tech stocks did not fare much better as the Nasdaq 100 fell 1.3 percent on Monday.

Crude oil fell 90 cents to $112.87 a barrel. It is the first time since May the commodity closed below $113 a barrel.

Tuesday's session will see a plethora of economic data before the open. The Producer Price Index (PPI), housing starts and building permits data are all due to report at 8:30 a.m. ET.