Markets in the United States were in line with Asian and European stocks, which fell as investors remained overwhelmed by weak economic data, and European officials met in Brussels to discuss fiscal troubles in the euro zone.
After weeks of uncertainty related to bailouts for Greece, the Italian authorities moved to rein in short-selling on the Milan stock exchange as fears mounted that Italy could become the next victim of the sovereign debt crisis.
“There is so much going on in the world that you almost need a scorecard to keep up,” Kevin H. Giddis, the executive managing director and president for fixed-income capital markets at Morgan Keegan Company, wrote in a research note.
“If Italy becomes more of a problem, then it could spiral out of control and cause the much-feared contagion that some have predicted,” Mr. Giddis wrote. “If that is the case, then a global economic slowdown will likely hit our shores here and take the legs out of an already wounded U.S. economy.”
The Dow Jones industrial average was down 151.44 points, or 1.20 percent, to 12,505.76. The broader Standard Poor’s 500-stock index fell 24.31 points, or 1.81 percent, to 1,319.49. The Nasdaq composite lost 57.19 points, or 2.00 percent, to 2,802.62.
Even after Monday’s losses, however, the Nasdaq and the Dow still rose about 1 percent since July 1, while the S. P. was slightly lower.
On the broader market in the United States, financial shares were down almost 3 percent, while energy and materials indexes were lower by more than 2 percent.
Brian M. Youngberg, an energy analyst for Edward Jones, said the dollar rise connected with the events in the euro zone was putting downward pressure on oil prices, which in turn was affecting energy stocks. “Everything is revolving around Europe right now in some way,” he said.
Citigroup fell 5.3 percent to $39.79; JPMorgan Chase declined 3.2 percent to $39.43, and Bank of America was down 3.27 percent at $10.35.
Google shares fell 0.89 percent to $527.28.
Alcoa was down 2.87 percent at $15.91; Caterpillar fell 2.04 percent to $108.16, and Boeing was down 2.29 percent at $73.35.
As risk aversion stepped up on Monday, United States Treasuries were trading higher. The euro fell to $1.4027 from $1.4204.
The Treasury’s benchmark 10-year note rose 28/32, to 101 23/32, and the yield fell to 2.92 percent, from 3.03 percent late Friday.
“Global issues are still outstanding,” said Jason Arnold, a financial analyst with RBC Capital Markets. “Markets were still digesting the jobs numbers from Friday, so I think that it is also a factor.” Asian markets, in particular, reacted to the United States government report that just 18,000 jobs were added in June.
In Europe, the Milan Stock Exchange fell 3.8 percent on Monday. The FTSE in London was down 1.03 percent, the CAC in Paris was down 2.71 percent and the DAX in Frankfurt was down 2.33 percent.
Another weight on sentiment was the report over the weekend that inflation in China had reached a three-year high.
“It is kind of like this cocktail of disappointing information and data,” said Stephen Wood, chief market strategist for Russell Investments.
William J. Schultz, chief investment officer for McQueen, Ball Associates, said that the debt ceiling talks and euro zone problems in particular “put this tone” to the market.
But he and other market analysts are pinning their hopes on the coming corporate reporting season for the second quarter.
“Those things are weighing, and now the hope is we are going to get earnings surprises on the positive side,” he said.
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