US STOCKS-S&P 500 near flat; hedge fund default concerns hit banks

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* Boeing rises on Southwest order for 737 MAX jets
* Archegos-linked stocks extend losses from last week
* Indexes: Dow up 0.3%, S&P down 0.1%, Nasdaq down 0.8%

(Updates to afternoon)
By Caroline Valetkevitch
NEW YORK, March 29 (Reuters) - The S&P 500 was nearly flat
in Monday afternoon trading, with bank shares falling amid
warnings of potential losses from a hedge fund's default on
margin calls, while optimism over the economy limited the day's
declines.
The Dow was higher, with shares of planemaker Boeing Co
BA.N up 1.9% after the company reached a deal with U.S. budget
carrier Southwest Airlines Co LUV.N for a variant of the 737
MAX aircraft. Nomura 8604.T and Credit Suisse CSGN.S are facing
billions of dollars in losses after a U.S. hedge fund, named by
sources as Archegos Capital, defaulted on margin calls, putting
investors on edge about who else might have been caught out.
Shares of Morgan Stanley MS.N were down 2.5% after the
Financial Times reported it had also sold billions of shares,
while the banks index .SPXBK shed about 1.9%.
"There's still chatter as to whether or not, and which,
American banks may be affected. That is a question that's
lurking. But so far the market has taken (the news) in stride
essentially," said Quincy Krosby, chief market strategist at
Prudential Financial in Newark, New Jersey.
Optimism about speedy vaccinations and record stimulus,
which drove the Dow and the S&P 500 to record closing highs on
Friday, helped keep a floor in the market, she said.
The Dow Jones Industrial Average .DJI rose 103 points, or
0.31%, to 33,175.88, the S&P 500 .SPX lost 4.21 points, or
0.11%, to 3,970.33 and the Nasdaq Composite .IXIC dropped
102.52 points, or 0.78%, to 13,036.21.
Discovery Inc DISCA.O , ViacomCBS VIAC.O , U.S.-listed
shares of Baidu BIDU.O and VIPShop VIPS.N , all linked to
Archegos, were lower, extending recent losses.
Wall Street's fear gauge .VIX rose.
The Nasdaq is set to post its first monthly decline in five
months while the S&P 500 and Dow are headed for their second
consecutive monthly gains.
Declining issues outnumbered advancing ones on the NYSE by a
1.94-to-1 ratio; on Nasdaq, a 3.11-to-1 ratio favored decliners.
The S&P 500 posted 69 new 52-week highs and no new lows; the
Nasdaq Composite recorded 81 new highs and 50 new lows.