A 12% surge in shares of Yahoo (NASDAQ: YHOO) did little for the stock market on Monday, as fears of more financial sector losses undid an early rally and sent the Dow and S&P to fresh two-year lows.

Yahoo shares shot higher after Microsoft (NASDAQ: MSFT) said it is open to talks with a new Yahoo board, which could give investor Carl Icahn's slate a boost at next month's shareholder meeting.

Broadcom (NASDAQ: BRCM) rose 7% on Piper Jaffray upgrade, and NetApp (NASDAQ: NTAP) jumped 5.5% on an R.W. Baird upgrade.

Apple (NASDAQ: AAPL) gained 3% ahead of the release of the 3G iPhone.

VeriSign (NASDAQ: VRSN) fell 9.5% after CEO William Roper resigned.

Interactive Intelligence (NASDAQ: ININ) plunged 25% on a warning.

The Nasdaq lost 2 to 2243, the S&P fell 10 to 1252, and the Dow lost 56 to 11,231. Volume rose to 5.28 billion shares on the NYSE, and declined to 2.37 billion on the Nasdaq. Decliners led by a 24-10 margin on the NYSE, and 19-10 on the Nasdaq. Downside volume was 69% on the NYSE, and 54% on the Nasdaq. New highs-new lows were 13-623 on the NYSE, and 30-514 on the Nasdaq.

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