Bank shares slumped after the Federal Bureau of Investigation raided the offices of two hedge funds as part of a broad insider trading probe. Goldman Sachs Group Inc. sank 3.4 percent, while Bank of America Corp. fell 3.1 percent.
Retail and consumer goods stocks rose on hopes that shoppers will be in a spending mood when they turn up in stores the day after Thanksgiving as the holiday shopping season gets under way.
The Dow Jones industrial average fell 24.97 points, 0.2 percent, to 11,178.58. The Dow was down as much as 149 points earlier.
Bank stocks were already under pressure because of concerns over how the bailout of Ireland would affect their investment portfolios and their ability to increase dividends.
"As part of the Ireland bailout, banks will have to take a haircut," said Benjamin Wallace, securities analyst at Grimes & Co in Westborough, Mass. "All these issues bring into question whether banks are strong enough to pay out dividends next year, and whether the government will ask them to hold on to more capital for some more time."
Ireland formally asked for help from its neighbors Sunday following weeks of pressure from the European Union. While details of the package were still being worked out, Ireland's government slipped further into crisis Monday as a coalition partner of Prime Minister Brian Cowen threatened to abandon him.
It was the second time this year that the European Union has come to the rescue of one of the 16 countries that use the euro. In May, the EU and the IMF committed $140 billion to Greece to prevent the country from defaulting on its debt.
Investors took heart from signs that the holiday shopping season is off to a good start. A widely watched gauge of spending, MasterCard Advisors SpendingPulse, found apparel sales rose 9.7 percent in the first two weeks of November.
Online retailer Amazon.com Inc.'s shares were up 3.4 percent, and Apple Inc. rose 2.2 percent. Other technology shares also rose, pushing the Nasdaq composite index up 13.90, or 0.6 percent, to 2,532.02.
The Standard & Poor's 500 index fell 1.89, or 0.2 percent, to 1,197.84.
In another positive sign, computer and printer maker Hewlett-Packard Co. reported better than expected results and raised its profit forecast. It's stock was up 1.7 percent in after-hours trading.
Investors will sort through a full plate of economic data this week, but trading will be shortened by the Thanksgiving holiday on Thursday.
Reports set to be released Tuesday and Wednesday include October home sales, an update of consumer sentiment, and revisions to earlier estimates of the third-quarter gross domestic product.
Some economists expect that the latest reading on U.S. economic growth for the third quarter will be slightly higher that the previously estimated 2.0 percent increase.
Rising shares outpaced falling shares by a hair on the New York Stock Exchange. Volume was 918 million shares.