New York – Stocks Slide Amid Bank Worries

New York – Stocks tumbled Monday as Bank of America earnings and stress-test buzz dragged down financials.

The Dow Jones Industrial Average dropped more than 250 points, or 3.5 percent, in trading. The tech-heavy Nasdaq lost more than 3 percent.

The negative start to the week comes on the back of a six-week winning streak, which has led many investors to hope for an end to the worst of the stock-market slump. Strong first-quarter earnings added to last week’s gains, but with the majority of companies yet to report, the risk for bleak corporate news is still there.

Financials, which have rallied in the past few weeks amid anticipation of an improvement in earnings, took a beating after a trifecta of disappointing news.

Investors were also troubled by a report that the government is converting its interest in bailed out financial institutions from preferred into common shares. The move is seen as a political maneuver that will enable the White House to avoid asking Congress for more money, but also constitutes a de facto nationalization of the businesses that will give the government ownership stakes.

And earlier buzz in the blogosphere indicated that bank stress-test results showed 16 of the 19 big banks tested were “technically insolvent.” The Treasury later released a statement that the stress-test results weren’t in yet but the damage to the stocks was already done.