Stocks Hunt for Direction; All Eyes on Europe

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The markets fluctuated between gains and losses on Monday as traders balanced a generally favorable outcome in Greece this weekend with ongoing worries about Spain's painfully high borrowing costs.

Today's Markets

As of 3:00 p.m. ET, the Dow Jones Industrial Average fell 17.4 points, or 0.14%, to 12750, the S&P 500 rose 2.9 points, or 0.22%, to 1346 and the Nasdaq Composite jumped 25.3 points, or 0.88%, to 2898.

The pivotal parliamentary election in Greece that garnered the attention of market participants around the world took place on Sunday. The conservative New Democracy party won by a slim margin, but because of the electoral math there, it was able to pick up substantially more seats than the rival left-leaning Syriza party, but both failed to secure a majority.

New Democracy now needs to begin the messy process of forging a coalition government. Together with the PASOK party, it may be possible form a unity government that supports the tough austerity measures international lenders require to dole out rescue funds the country needs to avoid defaulting and stay within the eurozone, analysts said. However, traders remained cautious.

"The way the market is seeing this as no real change," James Hughes, senior market analyst at Alpari said in an interview with FOX Business.

In a note to clients on Monday, analysts at Barclays Capital said fading optimism that global policymakers are going to take coordinated action to intervene in the credit markets, as seemed likely last week, also weighed on sentiment.

On top of that, debt yields in Spain and Italy, countries that are much bigger than Greece and seen as susceptible to the debt crisis, remained elevated on Monday.

"The day of reckoning may have been delayed, but the rest of the periphery still finds itself in the same predicament," Gavan Nolan, director of credit research at Markit wrote in an e-mail.

Indeed, the yield on Spain's 10-year bonds surged to 7.3%, according to data compiled by FOX Business. The cost of protecting $10 million worth of Spanish debt against a default also lurched to a record high of $611,000, according to Markit.

The Euro Stoxx 50, which tracks eurozone blue chips, fell 1.2%. The euro dipped 0.36% to $1.2636.

The U.S. economic calendar is light on the day, but the closely-watched meeting of the Federal Open Market Committee is slated for Tuesday and Wednesday. With inflation seen as broadly in check and the economy seemingly stalling, Fed watchers say the central bank may be considering additional stimulus measures. Among the measures that appear most likely is further lengthening of the Fed's balance sheet, which doesn't increase its size.

Oil futures were solidly lower on the day. The benchmark crude oil contract traded in New York fell 76 cents, or 0.9%, to $83.27 a barrel. Wholesale New York Harbor gasoline sold off by 1.5% to $2.66 a gallon.

In metals, gold slumped $1.10, or 0.07%, to $1,627 a troy ounce.

Foreign Markets

The Euro Stoxx 50 dropped 1.2% to 2198, the English FTSE 100 rose 0.22% to 5479 and the German DAX edged higher by 0.3% to 6305.

In Asia, the Japanese Nikkei 224 rallied 1.8% to 8721 and the Chinese Hang Seng jumped 1% to 19428.