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U.S. and European markets sold off on Monday as traders worried about renewed eurozone political instability and a round of weak economic data.
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The Dow Jones Industrial Average fell 102 points, or 0.78%, to 12927, the S&P 500 dipped 11.6 points, or 0.84%, to 1367 and the Nasdaq Composite dropped 30 points, or 1%, to 2970.
The Dow was down slightly less than 183 points at the lows of the session, meaning it was able to make a considerable comeback bid on the day.
The selloff on Monday was fairly broad. All but three Dow components ended in the red, with Wal-Mart (NYSE:WMT), Bank of America (NYSE:BAC) and General Electric (NYSE:GE) taking the heaviest losses.
Looking at the broader markets, basic materials and industrial companies fell by the sharpest margin. The number of shares trading hands in advancing shares outpaced that of declining shares by a ratio of more than 5-to-one on the New York Stock Exchange, according to data compiled by FOX Business.
Traders scooped up U.S. Treasury bonds as they fled riskier asset classes. The yield on the 10-year dropped 0.039-percentage point to 1.926% as a result, briefly touching a two-month low. Volatility jumped 5% as tracked by the CBOE's VIX, sometimes referred to as Wall Street's fear gauge.
Market participants had a slew of headlines from across the globe to digest to kick off what may be a busy trading week.
Markit's eurozone PMI gauge suggested the 17-member currency bloc's economic output contracted at the swiftest pace in five months in April. The measure came in at 47.4, down from 49.1 in March. Readings above 50 point to expansion, while those below indicate contraction.
Germany, Europe's powerhouse economy, saw activity in its important manufacturing sector contract at a the swiftest pace in 33 months. Meanwhile, France's key service-sector activity slumped to a six-month low.
"Germany’s economy continued to rest on a knife edge of recession in April, with modest service sector growth only just counterbalancing the escalating manufacturing downturn," Tim Moore, a senior economist at Markit said in a note accompanying the data.
Also on the European front, talks aimed at bringing the Netherlands' deficit in-line with a fiscal compact agreed to by all members of the eurozone broke down. As a result, Prime Minister Mark Rutte and his cabinet tendered their resignation, according to multiple media reports citing the country's Government Information Service.
The developments in the Netherlands "not only threatens early elections in the Netherlands, but also poses a significant threat to the effective ratification of the fiscal compact, the central plank in (German) Chancellor Merkel’s strategy for addressing the eurozone crisis," analysts at Nomura wrote in a note to clients.
French President Nicolas Sarkozy came in second to Socialist candidate François Hollande in a preliminary election contest. Sarkozy is a major part of the eurozone's drive to enforce tough austerity measures in its bid to fight the debt crisis. As a result, analysts said a loss by Sarkozy could be destabilizing.
Many exchanges throughout the continent fell more than 2%. Traders also bid up safe-haven Bunds in favor of comparatively risky French and Dutch debt, increasing those spreads.
In Asia, another PMI survey by HSBC showed China's manufacturing sector contracted at a slower rate in April from the month prior.
On the corporate front, Wal-Mart fell sharply after an article in the New York Times accused the retail giant of silencing a bribery investigation regarding its affiliate in Mexico. Fellow blue chip Pfizer (NYSE:PFE) said that it will sell its infant nutrition business to Swiss company Nestle for $11.85 billion.
There are also a slew of corporate earnings on tap for this week, with 176 companies set to report.
ConocoPhillips (NYSE:COP) reported weaker-than-expected adjusted quarterly profit, knocking sales lower. Kellogg (NYSE:K) also posted a disappointing quarterly profit, and pared back its full-year outlook.
Commodities were mixed. Crude oil traded in New York slid 77 cents, or 0.74%, to $103.11 a barrel. Wholesale New York harbor gasoline rose 1.4% to $3.19 a gallon.
In metals, gold fell $10.20, or 0.62%, to $1,633 a troy ounce.
European markets tumbled 2.9%, the English FTSE 100 fell 1.9% to 5666 and the German DAX sold off by 3.4% to 6523.
In Asia, the Japanese Nikkei 225 slipped 0.2% to 9542 and the Chinese Hang Seng dropped 0.79% to 20624.
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