Stocks hit hard on bank woes

NEW YORK (CNNMoney.com) -- Credit market woes hit Wall Street again Monday, with the Dow dropping around 242 points in a thinly-traded session also influenced by fluctuating oil prices and a weaker U.S. dollar.

The Dow Jones industrial average (INDU) lost nearly 242 points, or 2.1%. The broader Standard & Poor's 500 (SPX) index fell almost 2% and the Nasdaq composite (COMP) lost 2%.

"It's been looking ugly today," said Lee Schultheis, chief investment strategist at AIP Funds. "Lately people are realizing that there may be a whole other leg of this credit market fallout that they haven't anticipated yet."

Stocks rallied from mid-July through mid-April, as oil prices backed off records above $147 a barrel. But revived concerns about the financial sector over the last week have stopped investors from continuing any advance. Additionally, oil prices have been very volatile.

"You're seeing a rolling problem that started two years ago in the mortgage business, and we haven't touched the bottom of the swimming pool in terms of the housing market," said Mark Travis, CEO at Intrepid Capital Funds.

UPDATE: AMD To Sell Digital-TV Operations To Broadcom For $192.8 Million

DOW JONES NEWSWIRES

Advanced Micro Devices Inc. (AMD) has agreed to sell its digital-television business to Broadcom Corp. (BRCM) for $192.8 million as the struggling chip maker moves to streamline itself while it battles chip giant Intel Corp. (INTC).

The deal, set to close by year's end, will make AMD "leaner and more focused while seeking to create a business model to deliver sustainable profitability," said President and Chief Executive Dirk Meyer. He added the sale will bolster AMD's balance sheet and lower the amount of revenue the company needs to generate to break even.

Broadcom said adding AMD's digital-TV efforts with its own will allow the communication-chip maker to offer a complete line of products that covers the entire segment, from low to high end. The company has seen digital TV as a key growth area.

"It was a good move" for AMD, said FTN Midwest analyst Joanne Feeney.

"What they're trying to do is focus on the core businesses," she said, adding that while AMD's Xilleon digital-TV processor was well-regarded, the TV business "was a distraction to them."

Some 530 AMD employees will join Broadcom through the deal.

Meyer became CEO of AMD last week with a formidable challenge of returning the company to profitability after seven consecutive quarterly losses and transforming the way computers process graphics and information.