Wall Street slides on European debt fears
Stocks fell sharply on Monday as escalating fears about the possibility of Greek default and concern about the U.S. deficit plan prompted investors to surrender some of last week's gains.
Energy and financial stocks were the day's biggest laggards. The S&P energy sector index <.GSPE> was off nearly 3 percent as oil prices slid. The financial sector index <.GSPF> lost 3.4 percent following a steep decline in European banks on worries euro zone leaders won't be able to prevent debt-stricken Greece from sliding into default.
International lenders told Greece on Monday it must shrink its public sector and improve tax collection to avoid default within weeks as investors spooked by political setbacks in Europe dumped risky euro zone assets.
My analogy on the euro zone is we're playing a massive game of Whac-A-Mole. No one has any idea of what the resolution is, said Phil Orlando, chief equity market strategist at Federated Investors in New York.
The bigger problem is it doesn't appear to me at least that the Greek people have the appetite to follow through on the austerity measures.
Doubts about U.S. fiscal policy were also spoiling appetite for riskier assets. President Barack Obama laid out a $3 trillion plan to cut U.S. deficits by raising taxes on the rich, but Republicans mocked it as a political stunt, signaling the proposal has little chance of becoming law.
The Dow Jones industrial average <.DJI> was down 211.08 points, or 1.83 percent, at 11,298.01. The Standard & Poor's 500 Index <.SPX> was down 21.54 points, or 1.77 percent, at 1,194.47. The Nasdaq Composite Index <.IXIC> was down 30.17 points, or 1.15 percent, at 2,592.14.
U.S.-listed shares of a Swiss bank UBS
The Nasdaq fared better than other indexes. Apple Inc
Netflix Inc
Shares of diversified U.S. manufacturer Tyco International Ltd
Investors cheered the move amid speculation that smaller chunks of Tyco would become acquisition targets.
On Saturday, meetings of European Union finance ministers broke no new ground in dealing with the debt crisis in Greece and made no decision on whether to give more firepower to the 440 billion euro ($607 billion) bailout fund, as suggested by U.S. Treasury Secretary Timothy Geithner.
The Greek prime minister, George Papandreou, canceled a visit to the United States to instead chair a cabinet meeting on Sunday, a day before European Union and International Monetary Fund inspectors hold a conference call with Finance Minister Evangelos Venizelos to hear how Greece will plug this year's budget shortfall.
A regional election defeat for German Chancellor Angela Merkel on Sunday, her sixth election defeat this year, also kept investors on edge.
(Additional reporting by Angela Moon)
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