After moving sharply lower at the start of trading on Monday, stocks regained some ground over the course of the session but still ended the day firmly in the red. Renewed concerns about the financial situation in Europe weighed on the markets.
The major averages moved roughly sideways going into the close of trading, stuck firmly in negative territory. The Dow fell 101.11 points or 0.8 percent to 12,721.46, the Nasdaq slid 35.15 points or 1.2 percent to 2,890.15 and the S&P 500 dropped 12.14 points or 0.9 percent to 1,350.52.
The sell-off seen at the open came as worries about the ongoing European debt crisis resurfaced amid indications that Spain could require a full bailout.
Contributing to the worries about Spain, the country's central bank said Spanish GDP fell by 0.4 percent in the second quarter following a 0.3 percent contraction in the first quarter.
Traders also expressed concerns about developments in Greece, with officials from the country's troika of international creditors due to visit Athens on Tuesday to review the progress Greece has made with respect to enacting reforms and austerity measures.
Germany's Der Spiegel reported that the International Monetary Fund does not want to provide Greece with any additional financing.
Peter Boockvar, managing director at Miller Tabak said, "From the perspective of its creditors, particularly the Germans, the moment of 'enough is enough' is about to be reached with Greece."
The focus on Europe came amid a lack of major U.S. economic data, although key reports on second quarter GDP, new home sales, durable goods orders and consumer sentiment are scheduled to be released later in the week.
Nonetheless, some traders used the initial weakness on Wall Street as an opportunity to pick up stocks at reduced levels, contributing to the recovery attempt by the broader markets.
Among individual stocks, shares of McDonald's (MCD) came under pressure after the fast food giant reported second quarter earnings that fell year-over-year. McDonald's fell by 2.9 percent, pulling back further off last Thursday's two-month closing high.
While most of the major sectors ended the session well off their worst levels, significant weakness remained visible among healthcare provider stocks. The Morgan Stanley Healthcare Provider Index fell by 2.7 percent to its lowest closing level in almost a month.
Kindred Healthcare (KND) and Sunrise Senior Living (SRZ) turned in two of the healthcare provider sector's worst performances, falling by 6 percent and 5.5 percent, respectively.
Steel stocks also saw substantial weakness on the day amid concerns about the outlook for global demand. While the NYSE Arca Steel Index closed well off its low for the session, the index still ended the day down by 2.7 percent.
Considerable weakness was also visible among gold stocks, as reflected by the 2.6 percent loss posted by the NYSE Arca Gold Bugs Index. The losses by gold stocks came as the price of gold for August delivery slipped $5.40 to $1,577.30 an ounce.
Biotechnology, software, networking, and oil stocks also posted notable losses on the day, moving lower along with most of the major sectors.
In overseas trading, stock markets across the Asia-Pacific region saw significant weakness during trading on Monday. Japan's Nikkei 225 Index ended the day down by 1.9 percent, while Hong Kong's Hang Seng Index plummeted by 3 percent.
The major European markets also moved sharply lower on the day. The U.K.'s FTSE 100 Index tumbled by 2.1 percent, while the French CAC 40 Index and the German DAX Index plunged by 2.9 percent and 3.2 percent, respectively.
In the bond market, treasuries moved modestly higher, benefiting from the renewed worries about Europe. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.5 basis points to a new record closing low of 1.435 percent.
Amid another light day on the U.S. economic front, trading on Tuesday could be impacted by any notable developments in Europe.
Earnings news is also likely to attract some attention, with AT&T (T), DuPont (DD), Lockheed Martin (LMT), UPS (UPS), and Whirlpool (WHR) among the companies releasing their quarterly results before the start of trading.
by RTT Staff Writer
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