* Rally in bank shares fizzles out
* American Express says credit delinquencies rise
* Dow off 0.1 pct, S&P off 0.4 pct, Nasdaq down 1.9 pct
* For up-to-the-minute market news, click []
(Updates with Alcoa's drop after the bell, adds volume)
By Leah Schnurr
NEW YORK, March 16 (Reuters) - U.S. stocks fell on Monday
after American Express Co <AXP.N> said the number of people
struggling to make credit card payments grew, erasing earlier
optimism that banks could return to profit in the downturn.
It was Wall Street's first decline after a four-day
winning streak. The Nasdaq fell nearly 2 percent as investors
booked profits in semiconductor stocks following a strong
week. An index of semiconductor shares <.SOXX> fell 3.6
percent, following a 13 percent rise last week.
American Express, which caters to wealthier consumers that
are viewed as more credit worthy, said its credit card default
rates rose to 8.7 percent in February. Shares of American
Express lost 3.3 percent to $12.66.
"American Express took the legs out from under us," said
Joe Saluzzi, co-manager of trading at Themis Trading in
Chatham, New Jersey. "When they came out that the default
rates were higher in the last quarter, that accelerated the
selling," he added.
Intel also put pressure on the Nasdaq after the company
accused Advanced Micro Devices <AMD.N> of breaching the terms
of a cross-licensing agreement between the rival chip makers.
For details, see [].
The Dow Jones industrial average <> shed 7.01 points,
or 0.10 percent, to 7,216.97. The Standard & Poor's 500 Index
<.SPX> declined 2.66 points, or 0.35 percent, to 753.89. The
Nasdaq Composite Index <> lost 27.48 points, or 1.92
percent, to 1,404.02.
The declines put the brakes on last week's four-day rally.
Even after the recent advance, the S&P 500 is down 16.5
percent in 2009 and off more than 50 percent from highs
reached in October 2007.
ALCOA DROPS LATE
Shares of Alcoa Inc <AA.N> slid 10.1 percent to $5.50
in extended trading after the company said after the bell that
it will cut its dividend, issue stock and convertible notes
and trim its 2010 spending in an effort to weather a downturn
in demand for aluminum. [].
Banks had earlier pushed indexes higher after British bank
Barclays Plc <BARC.L><BCS.N> said it had a "strong start" to
2009. The bank also confirmed it had discussed selling its
iShares unit, in a move that could help it avoid giving a
stake to the British government. For details see
[]
The comments echoed those made last week by Bank of
America Corp <BAC.N>, JPMorgan Chase & Co <JPM.N> and
Citigroup Inc <C.N>. Citi shares jumped 31 percent to $2.33,
off a session high of $2.68. Earlier, Citi's stock had shot up
as much as 50.6 percent.
The S&P financial index <.GSPF> reversed earlier gains to
end down 1.9 percent.
BANKING QUESTIONS STILL REMAIN
Analysts also noted that despite the positive comments
from banks, questions over what measures the U.S. government
will take to shore up the financial system still weigh on
investors.
"While we've had a significant rally, I think there's
still too many questions that need to be answered for people
to feel comfortable piling into the market even here," said
Michael James, senior trader at regional investment bank
Wedbush Morgan, in Los Angeles.
Among Nasdaq stocks, shares of Intel fell 3.1 percent to
$14.25.
AMD, which denied Intel's charge that it had breached a
cross-licensing agreement, dropped 1.6 percent to $2.48 on the
New York Stock Exchange.
Comments from Federal Reserve Chairman Ben Bernanke helped
improve investor sentiment after he said during an interview
on the CBS program "60 Minutes" on Sunday that the U.S.
recession could probably come to an end this year and "we'll
see recovery beginning next year." []
Financial stocks were also helped by news that the
Financial Accounting Standards Board, which sets U.S.
accounting rules, proposed to allow more leeway on
mark-to-market accounting rules. []
Mark-to-market accounting has forced financial
institutions to write down billions of dollars in assets.
In economic news, a report showed that a gauge of New York
State manufacturing activity hit a record low in March.
[]
Trading was active on the New York Stock Exchange, with
about 1.9 billion shares changing hands, above last year's
estimated daily average of 1.49 billion, while on Nasdaq,
about 2.15 billion shares traded, below last year's daily
average of 2.28 billion..
Advancing stocks outnumbered declining ones on the NYSE by
a ratio of about 3 to 2. On the Nasdaq, declining stocks
prevailed, with about five stocks falling for every four that
rose.
(Additional reporting by Herb Lash; Editing by Jan Paschal)
