The Dow Jones industrial average fell 61.30 points, or 0.5 percent, to 12,089.96. The Standard Poor’s 500-stock index dropped 13.99 points, or 1.1 percent, to 1,286.17. It was the first closing below 1,300 for the S. P. index since March 23. The Nasdaq composite fell 30.22, or 1.1 percent, to 2,702.56.

All 10 industry groups in the S. P. index fell. Energy and financial companies each lost 2 percent.

The nation’s biggest banks declined 2 percent or more, after a speech by a Federal Reserve governor on Friday indicating that banks may be required to set aside more cash to cover potential losses. If the proposal were to take effect, banks would be left with less money to lend, which could hurt earnings. Citigroup and Bank of America each lost about 4 percent, and JPMorgan Chase shares dropped 2.5 percent.

Airline stocks fell after an industry group cut its profit estimates for this year by half. The group blamed disasters in Japan, unrest in the Middle East and higher fuel prices. Delta Air Lines and AMR, the parent company of American Airlines, each lost more than 3 percent.

Investors also remained focused on the grim unemployment report released last Friday, which sent stocks sharply lower that day.

“Wall Street came back, quickly and very strongly, at a time when the populace was still weak in terms of low job growth and low wage growth,” said Daniel Penrod, a senior industry analyst at California Credit Union League. “That appeared to be overly optimistic.”

The Labor Department reported that employers added only 54,000 new workers in May. The unemployment rate inched up to 9.1 percent from 9 percent.

Pending regulation and lawsuits also affected some individual companies. Lorillard, the tobacco company, fell 7 percent, the most of any company in the S. P. 500 index. Investors are concerned that the Food and Drug Administration could ban menthol cigarettes. The company makes the most popular menthol cigarette, Newport.

The oil field services company Halliburton fell 4.5 percent after the Supreme Court ruled that shareholders could pursue a class-action lawsuit that claimed the company had inflated its stock price.

Interest rates were steady. The Treasury’s benchmark 10-year note fell 3/32, to 101 3/32, and the yield was 3 percent, up from 2.99 percent late Friday.

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