The stock market fell sharply on Monday as the EUR/USD pair plunged on renewed concerns over Europe.
Spanish bond yields rose after Prime Minister Mariano Rajoy faced calls to resign amid a corruption scandal. The uncertainty in Spain, along with a surging Silvio Berlusconi in Italian polls, left some investors concerned over potential political turmoil in Europe which could destabilize the regions fiscal situation.
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All of the major averages recorded losses on the session, led by the Nasdaq Composite. Prior to Monday's sell-off, the markets had been moving strongly higher to start the year.
The Dow Jones Industrial Average fell around 130 points, or 0.93 percent, to close at 13,880.
The S&P 500 lost more than 17 points, or 1.15 percent, to finish at 1,496.
The Nasdaq Composite registered a decline of 48 points, or 1.51 percent, to 3,131.
The Dow Jones Industrial Average
Factory orders for December rose 1.8 percent compared to a decline of 0.3 percent in November. While the number was an improvement, it came in below forecasts calling for a rise of three percent.
Most of the gains were attributable to transportation orders, namely aircraft orders. Transportation orders were up 11.7 percent and aircraft orders rose 23.3 percent.
Crude oil was trading lower late in the day along with the stock market. At last check, NYMEX crude futures, the U.S. benchmark, had lost around 1.50 percent and were trading at $96.29. Brent crude futures were last down around one percent to $115.64. Natural gas futures had risen better than 0.60 percent to $3.32.
Precious metals were mixed on the session. COMEX gold futures were last up around 0.28 percent to $1,675. Silver had lost around 0.70 percent and was trading at $31.74. Copper was down less than 0.50 percent on the day.
Both corn and wheat recorded slight losses on the session while soybeans and soybean meal were both up 1 percent or better. Most contracts were down in soft commodities, including a more than two percent loss for coffee and a 1.50 percent loss for cotton.
Late in the day, the iShares Barclays 20+ Year Treasury Bond ETF (NYSE:TLT) had surged over 1.30 percent to $117.06 as stocks sold off.
Yields were pushed lower as investors snapped up bonds. The yield on the 2-Year Note fell one basis point to 0.25 percent while the 5-Year lost four basis points to 0.84 percent.
The yields on the 10-Year Note and 30-Year Bond fell five basis points to 1.97 percent and 3.17 percent, respectively.
Late in the day the PowerShares DB US Dollar Index Bullish ETF (NYSE:UUP), which tracks the performance of the greenback versus a basket of foreign currencies, had climbed 0.51 percent to $21.71 on the back of a weaker euro.
The major story on the day was a sharp fall in the EUR/USD pair. At last check, the EUR/USD had lost more than one percent to 1.3519. Most other currencies were relatively stable. The USD/JPY, which has been very active lost 0.38 percent.
Volatility and Volume
The VIX got a big pop on Monday as the markets saw the first sign of volatility in weeks. The VIX closed the day up almost 13 percent to 14.54.
With stocks falling on the session, volume was slightly higher than it has been, but still below three-month trends. Around 118 million SPDR S&P 500 ETF (NYSE:SPY) shares traded hands compared to a 3-month daily average of just under 138 million.
McGraw-Hill (NYSE:MHP) shares plunged around 13 percent intra-day after the Department of Justice said that it intends to sue the company's Standard & Poor's division over its ratings of certain CDOs in 2007.
Rival Moody's (NYSE:MCO) was also down sharply on the news. Late in the day, the stock had lost almost 11 percent and was trading at $49.44.
Shares of Viad Corp. (NYSE:VVI) fell more than 10 percent after the company's fiscal fourth-quarter earnings results.
Acme Packet (NASDAQ:APKT) jumped almost 24 percent after the company agreed to be acquired by Oracle (NASDAQ:ORCL). The per-share cash price of $29.25 under the terms of the deal was a 22 percent premium to APKT's Friday closing price.
The deal also triggered a jump in other networking names such as BroadSoft (NASDAQ:BSFT), which was up more than 10 percent, and Sonus Networks (NASDAQ:SONS), which added 20 percent.
Mercury General (NYSE:MCY) rose more than six percent after better than expected fourth-quarter results.
Royal Caribbean Cruises (NYSE:RCL) fell a little more than three percent after the company swung to a loss in the fourth-quarter.
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