The market started new week in a volatile fashion. The Dow, up more than 130 points during early trading, finished the session down by 45 points. The S&P 500 opened the day higher by more than 1% but ended the day lower by almost 1%. The Nasdaq also lost more than 1% for the session. It was a light day during an otherwise busy week in terms of economic and corporate earnings news. But several headline news did hit the wire over the weekend. Start with the failure of IndyMac Bank. With more than $32 billion assets under its management, IndyMac became the second largest financial institution to fail in US history. The news created ripple effect to other regional banks. Washington Mutual, for instance, posted its biggest drop ever today by losing 35% despite the company insisted it saw no unusual depositor activity. Clearly, investors are concerned that their money will be the first to go in cases of banking failures. The other important announcement over the weekend came from Treasury Secretary Paulson, who outlined a plan to ensure that the GSEs will not be short of funds. The market initially took the news positively by bidding up financial stocks but quickly resumed its selling activities.

Financials and technologies were among the biggest losers for the session. On the winners’ list, we had names like basic materials and energies. The CRB commodity index lost less than 1% as strengths in energies and precious metals were offset by weaknesses in agriculture products. The US dollar was mixed against most major currencies. Treasuries reversed losses from last Friday as typical flight to quality trade resumed during turmoil times in equity market. The VIX index jumped more than 3% and closed 28.48. The market breath was negative with more 1000 issues hitting fresh 52-week lows.