Selling Continues, Volume Rises

1 The major averages extended Mon.'s big sell-off in heavier volume. The Dow fell 1.2%, falling back into the red for '09. The NYSE composite and S&P 500 sank 1.3% and the Nasdaq 0.8%. Leading stocks fell again; some have retraced most, if not all, of their recent gains. Retail and machinery groups were big losers. The 10-year T-yield fell 7 ticks to 3.66%.

Iranians Defy Protest Warning

2 Defying a ban, demonstrators marched in Tehran, claiming Pres. Mahmoud Ahmadinejad cheated to win re-election. Supreme Leader Ayatollah Ali Khamenei urged calm as state TV highlighted a pro-gov't rally. Iran expelled some foreign reporters and barred others from protests. Pres. Obama said the election's outcome won't make a big impact on U.S. policies.

Obama Urges Health, Fin'l Fixes

3 The president pressed for health care reform in TV interviews, even as the White House distanced itself from Sen. Kennedy's plan, which the CBO said would lift the deficit by $1 tril over 10 years. On the eve of the administration's financial rules overhaul, he said the gov't isn't overregulating, reminding Wall St. that it was near an "abyss."

Best Buy Tumbles As Sales Miss

4 The electronics retailer's Q1 EPS slipped 2% to 42 cents ex items, beating views by 8 cents. Sales grew 12% to $10.1 bil, just below forecasts. Same-store sales fell 6.2%. Some analysts were surprised Best Buy didn't pick up more business after rival Circuit City's demise. Best Buy backed its '10 EPS target of $2.50-$2.90 vs. views of $2.79. Shares fell 7%.

May Housing Starts Rose 17.2%

5 The annualized 532,000 units were much stronger than expected, more evidence that home construction has bottomed. Always volatile multifamily starts skyrocketed 61.7%. But single-family starts rose 7.5%, their 3rd straight monthly gain. Building permits, a gauge of future activity, rose 4%. In housing, starts tend to bottom before sales and especially prices.

Industrial Output At 11-Year Low

6 Industrial production sank 1.1% in May, the 7th straight decline and worse than expected. It's the lowest level since July '98. Auto output crashed 5.2% on big plant shutdowns. Even ex autos, production fell 0.9%. Capacity utilization fell to 68.3%, a new low on records going back to '67. Auto industry cap use was just 38.3%.

Russia Summit Bucks The Dollar

7 The greenback fell after Russian Pres. Medvedev said "reserve currencies, including the U.S. dollar, have failed to perform their functions," the latest in a series of conflicting Kremlin statements on the subject. But he avoided criticizing the dollar at the end of a summit with the leaders of India, Brazil and top Treasury buyer China, likely indicating that they don't share his view.

MySpace Slashes 30% Of Staff

8 News Corp.'s (NasdaqGS:NWS - News) social network said it'll cut 420 jobs. The move drops its head count to 1,000 and hits all U.S. units. Analysts had expected cuts at the online hangout, which has fallen behind Facebook. Facebook has 307 mil users globally -- 70.3 mil in the U.S., comScore says. MySpace has 123 mil -- 70.2 mil in the U.S. News Corp. fell 3%.

U.S. Won't Bail Out Calif. Budget

9 The White House dashed hopes that the federal gov't would help Calif. overcome a massive budget crisis, saying the state will have to solve its own problem. After running deficits even when tax revenue boomed, Calif.'s shortfall has exploded amid a housing crash and severe recession. The state is on track to run out of cash within weeks.

U.S. Nixes New Auto Parts Aid

10 The federal gov't rejected an industry request for $10 bil more in loan guarantees on top of $5 bil of already-approved aid. Sen. Sherrod Brown, D-Ohio, says he'll push Congress to provide more help to suppliers. Also, GM agreed to sell Swedish unit Saab to small local sports carmaker Koenigsegg. Terms weren't given, but the Swedish gov't will guarantee $600 mil in financing.