U.S. stocks fell on Monday, hurt by diminishing appetite for riskier assets due to fears that fourth-quarter earnings might spotlight further deterioration in the economy. Concerns about the prospect for more financial sector losses stemming from the mortgage slump added to the negative tone, with shares of Citigroup (C.N: Quote, Profile, Research, Stock Buzz) sliding nearly 8 percent, and JPMorgan Chase (JPM.N: Quote, Profile, Research, Stock Buzz) off more than 3 percent. According to Thomson Reuters estimates, fourth-quarter S&P 500 earnings should decline 15.1 percent from a year earlier. A sharp slide in oil prices was another headwind for the market as it dragged shares of energy companies, including Exxon Mobil Corp (XOM.N: Quote, Profile, Research, Stock Buzz), lower. The caution was tempered, however, by hopes that Congress will push to have the remaining $350 billion of the $700 billion financial rescue plan released by the time U.S. President-elect Barack Obama is sworn in on Jan. 20. Alcoa Inc (AA.N: Quote, Profile, Research, Stock Buzz) is scheduled to kick off the earnings season when it posts fourth-quarter results after the bell. Deutsche Bank recommended a "sell" on the aluminum producer, sending the stock down 9.5 percent to $9.78 on the New York Stock Exchange. The slide in Citigroup shares followed news that the embattled U.S. bank is nearing a deal to sell a controlling stake in its Smith Barney retail brokerage business to Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) to raise cash. "The perception is that this is a desperate measure taken by a firm in turmoil to try to throw itself a lifeline," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "Investors don't see catalysts. There's a real worry that earnings estimates are just too optimistic." A joint venture deal would lead to Morgan Stanley paying Citigroup about $2.5 billion to $3 billion in cash, a source familiar with the situation said. For more see [ID:nLC142461]. The Dow Jones industrial average .DJI fell 61.49 points, or 0.72 percent, to 8,537.69. The Standard & Poor's 500 Index .SPX slid 9.75 points, or 1.10 percent, to 880.60. The Nasdaq Composite Index .IXIC shed 13.22 points, or 0.84 percent, to 1,558.37. U.S. front-month crude CLc1 fell $2.62 to $38.21 a barrel. JPMorgan shares declined 3.1 percent to $25.15 on the NYSE, as shares of Citigroup tumbled to $6.22. The S&P financial index .GSPF was down 1.8 percent. On Nasdaq, shares of Apple Inc (AAPL.O: Quote, Profile, Research, Stock Buzz) were among the top drags, falling more than 1 percent to $89.63. Shares of Harley-Davidson (HOG.N: Quote, Profile, Research, Stock Buzz) slid 10.5 percent to $14.32 after Goldman Sachs cut its rating on the stock to "sell." Shares of Advanced Medical Optics (EYE.N: Quote, Profile, Research, Stock Buzz) surged 145.3 percent to $21.72 after the company agreed to be bought by Abbott Labs (ABT.N: Quote, Profile, Research, Stock Buzz) for nearly $1.4 billion. [ID:nN12317055]. As the economic picture worsens, Obama has vowed to restructure Washington's financial rescue plan to save more U.S. families from home foreclosures. Obama's aides have been in discussions with the White House over whether President George W. Bush should ask Congress for permission to use the remainder of the $700 billion rescue package aimed at stabilizing the financial system. Obama has not asked the White House to request the remaining money, but it would do so if asked, Bush said on Monday. Friday's data showing that the U.S. unemployment rate surged to its highest in 16 years in December sent Wall Street tumbling, but the benchmark S&P 500 index remains 16 percent higher since its Nov. 21 bear market intraday low. (Editing by James Dalgleish)

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