Oil Drops, but Rally Fades

The markets saw modest losses today after a rally spurred by a drop in crude prices sputtered over capital concerns at Fannie Mae and Freddie Mac, MarketWatch reports. The Dow fell 56.58 to 11,231.96, the Nasdaq dropped 2.06 to 2,243.32, and the S&P 500 fell 10.59 to 1,252.31.

Oil retreated to around $141 a barrel, aided by a stronger dollar. Fannie Mae and Freddie Mac saw double-digit losses after a Lehman analysis said the lender would need to raise billions of dollars if a proposed accounting rule goes into effect. The drop in financials overshadowed strength in the technology sector, with Microsoft and Yahoo both up on news of their on-again merger talks. (More Dow Jones stories.)