Wall Street Ends Lower on Greek Debt Worries

MarketsDow Jones Newswires

U.S. stocks fell on Monday, dragged down by a selloff in European markets, as investors were unnerved by the deepening standoff between Greece and its creditors.

Stocks kicked off the day lower and held on to their declines through the session after Greece's government announced plans to cancel about a third of the debt-reduction and economic reform measures that are key conditions for its international bailout. The impasse pushes the country's economy closer to a default and has revived fears of the prospect of a forced exit by Greece from Europe's single-currency union.

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Most U.S. investors expect a resolution to the standoff that preserves the eurozone. Still, many market observers have expressed concern that the impasse could further dent economic growth on the continent and spur other European countries to back off on their bailout pledges.

"They're setting a precedent, and that's really the most important thing, " said Michael Farr, president of Farr, Miller & Washington, which manages about $1.2 billion. "Our markets are down because this is a reminder that this problem won't go away. It's not as insignificant as we like to think."

The Dow Jones Industrial Average lost 95.08 points, or 0.5%, to 17729.21, while the S&P 500 shed 8.73 points, or 0.4%, to 2046.74. The Nasdaq Composite Index fell 18.39 points, or 0.4%, to 4726.01.

Traders said the selling wasn't unusually heavy and volumes were light, suggesting that investors still expect an orderly resolution to Greece's troubles.

"It's probably a game of chicken, but we have to wait and see," said Tom Carter, managing director at JonesTrading.

Investors are contending with a raft of macroeconomic concerns this year, which are leading to higher levels of market volatility. Weakening economic growth overseas, the monthslong slide in oil prices and the strength of the U.S. dollar have all dented quarterly earnings and knocked stocks lower. Year to date, the S&P 500 is down 0.6%, following last year's 11% gain.

"We're still grinding through earnings season here in the U.S., and it has been very mixed to negative," said Brian Fenske, head of sales trading at ITG.

Mr. Farr said stocks remain at high valuations, making it difficult to find bargains. "We're still looking," he said. "It's harder to find investments that we think are compelling and reasonably priced. That's never a good sign. Five years ago or six years ago, I could buy anything."

Still, other investors say that stocks have room to climb in 2015, pointing to the accelerating U.S. economy, the falling jobless rate and rising consumer confidence helped by lower energy prices. Doug Cote, chief market strategist at Voya Investment Management, said the recent slide presents investors with an opportunity to buy stocks at lower levels. "We've seen this before with Greece," he said. "I say this is an opportunity to get this market a little cheaper."

The U.S. economy created more than a million jobs over the past three months, with a steady gain of 257,000 in January and sizable upward revisions to prior months' figures, the Labor Department said on Friday.

In other markets, Treasury prices fell, lifting the yield on the 10-year note to 1.948% from 1.940% on Friday. Gold futures added 0.6% to $1240.80 an ounce.

Energy stocks posted gains as oil prices rose 2.3% to $52.86 a barrel.

In corporate news, communications-equipment maker Motorola Solutions Inc. is exploring a sale of the company, The Wall Street Journal reported. Shares rose 4.8%.

Shares of McDonald's Corp. fell 1.4% after the fast-food chain reported monthly sales fell a worse-than-expected 1.8% in January on weakness in Asia.

American Airlines Group Inc. shares lost 3.4%. The airline reported lower traffic for January and raised its fuel-cost guidance for the first quarter.