Stocks decline on swine flu concerns

Wall Street retreated Monday, unsettled by the possibility of a major swine flu outbreak.

The flu is not yet a global pandemic. The virus is suspected to be responsible for more than 100 deaths in Mexico, but cases in the United States and Canada have been mild.

Still, investors are nervous that the flu could spread and thwart economic recovery, particularly in areas that rely on travel and tourism. Spain became the first European country to confirm a case of swine flu, and the European Union health commissioner advised Europeans to avoid nonessential travel to Mexico and the United States.

The major stock indexes fell by less than 1 percent, but the stocks of hotels, airlines and other travel-related companies posted steeper losses.

The virus is striking at a vulnerable time for the stock market and the economy. The Dow Jones industrial average has jumped 23.4 percent from its nearly 12-year low on March 9, but stalled last week as investors plodded through a deluge of mixed earnings reports.

Craig Peckham, market strategist at Jefferies & Co., called the swine flu an "easy excuse" for investors to cash in any profits they may have made in recent weeks. Underlying the selloff, he said, is the worry that the global economy will take a long time to recover despite recent positive signals.

The rally over the last several weeks "has been about the world getting less bad," Peckham said. "At a certain point, further gains have to be predicated on things getting fundamentally better, as opposed to less bad."

Wall Street is also anxious as it waits for the results of the government's stress tests of the 19 largest U.S. banks. Regulators briefed bank officials on Friday about the tests, which will determine which banks may need further help from the government, but the results will not be publicly released until May 4.

In midmorning trading, the Dow fell 38.71, or 0.5 percent, to 8,037.58. The index's decline was mitigated by General Motors Corp., whose stock jumped 32 percent on job cuts and a request for a stock-for-debt exchange with the government.

Broader stock indicators also lost ground. The Standard & Poor's 500 index fell 6.42, or 0.7 percent, to 859.81, and the Nasdaq composite index fell 8.30, or 0.5 percent, to 1,685.99.

The Russell 2000 index of smaller companies fell 7.56, or 1.6 percent, to 471.18.

Starwood Hotels and Resorts Worldwide Inc. fell 8.7 percent; Carnival Corp. fell 8.8 percent; and AMR Corp., the parent company of American Airlines, fell 14.4 percent.

Overseas, Japan's Nikkei stock average rose 0.2 percent, but Britain's FTSE 100 fell 0.8 percent in afternoon trading. Germany's DAX index fell 1.2 percent, and France's CAC-40 fell 1.2 percent.

U.S. government bond prices rose. The yield on the benchmark 10-year Treasury note fell to 2.93 percent from 3.00 percent late Friday. Bond prices move opposite to yields.

The dollar was mostly higher against other major currencies, while gold prices fell.

Light, sweet crude fell $2.66 to $48.89 a barrel on the New York Mercantile Exchange.