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Stocks pull off earlier highs, financials retreat

NEW YORK — Investors slowed their hectic buying of stocks Monday, leaving the major indexes little changed after a four-day advance.

Stocks pulled back from their early highs as financial stocks, which had been surging, retreated. Meanwhile, Treasury prices rallied ahead of the latest round of debt auctions.

Analysts had expected a pause after stocks soared last week, lifting the Dow Jones industrials 370 points. The advance picked up momentum Friday after Federal Reserve Chairman Ben Bernanke declared that the economy is on the verge of recovery.

"I think people still believe there are signs of recovery here, but it doesn't hurt to take a little bit of profits," said Alan Villalon, senior research analyst at First American Funds.

Market experts have been warning, though, that the market's upbeat mood could be tested with reports this week on consumer confidence and housing. Some signs of recovery have emerged already in the housing market, but consumers are still struggling. Improved consumer confidence and spending is widely seen as one of the keys that could help end the recession.

"We're lining up here in advance of the data this week," said James Cox, managing partner at Harris Financial Group. "This is a good time to get out."

Bank shares gave up some of their early gains and traded mixed, weighed down by losses among regional banks. Investors have been worried that smaller banks could face significant hardships in the coming months as losses among commercial real estate loans pile up.

In a research note late Sunday, Rochedale Securities banking analyst Richard Bove predicted that 150 to 200 more U.S. banks could fail in the current banking crisis on top of the 81 banks that have already failed this year, putting greater stress on the Federal Deposit Insurance Corp.'s deposit insurance fund.

The Dow rose 3.32, or less than 0.1 percent, to 9,509.28, after earlier rising as much as 82 points. The Standard & Poor's 500 index fell 0.56, or 0.1 percent, to 1,025.57, while the Nasdaq composite index fell 2.92, or 0.1 percent, to 2,017.98.