Stocks Slide, Led by Industrials; CAT Falls
Stocks traded sharply lower amid worries over global growth in Europe and China, and continuing concerns about debt troubles in peripheral euro zone countries.
The Dow Jones Industrial Average fell more than 160 points after ending a volatile week loweron Friday.
Most blue-chip components sank, led by Caterpillar.
TheS&P 500 fell more than 1 percent, while the tech-heavy Nasdaq sank more than 1.5 percent. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 18.
All key S&P 500 sectors fell, led by industrials,technology and energy.
Troubles in Europe mounted, beginning with Standard & Poor’s downgrade of Italy's outlook to "negative" from "stable" over the weekend. Then Spain's ruling Socialist party suffered an election setback.On Monday, European purchasing managers index dataindicated a slowdown in growth in the euro zone, with German and French numbers below expectations.
Also in Europe, several leaders called for Greece to avoid debt restructuring and push ahead with austerity measures. The focus on Monday remains on whether Greece will receive another handout. Many investors fear that if Greece restructures its debt, Ireland and Portugal could follow suit.
President Barack Obama was in Dublin, Ireland on Monday morningwhere he will talk with the Prime Minister about debt and the country’s economy at the start of a European tour.
And in China, an index of manufacturing growth fell in May, an indication the economy is slowing down.
The news of slowing global growth sent oil prices lower. U.S. light, sweet crude fell more than 3 percent to below $97 a barrel. In London, Brentcrude fell nearly 3 percent to nearly $109.
The euro zone troubles pushed the euro to a two-month lowagainst the dollar. The dollar index rose more than 1 percent against a basket of currencies. Meanwhile, gold stablizedabove $1,513 an ounce, while silver was down slightly, just below $35 an ounce.
Boeing and General Dynamics fell despite news the U.S. Supreme Court vacated a lower court ruling against the firms. The case stems from the Navy's cancellation of a $4.8 billion fighter jet.
Sony fell after changing its earnings estimate for the year to a net loss from a profit, a sign the company suffered a financial setback from the multiple disasters that hit Japan in March.
Campbell Soup traded flat to lower despite beating profit expectations and after S&P Equity raised its rating on the stock to "hold" from "sell." The research firm also raised its price target for the stock to $36 a share from $31.
LinkedIn slumped a day before restrictions are removed to allow traders to short shares of the professional networking site, a strategy that involves betting that a stock's price will fall. Only 10 percent of LinkedIn's shares are public, however, which will make it difficult to execute the strategy.
Mosaic was among the few stocks higher on Monday after JPMorgan raised its rating on the fertilizer maker to "overweight" from "neutral," citing valuation, and Stifel Nicolaus raised its rating to "buy" from "hold." Rival fertilizer companies also gained, including Potash , CF Industries , and Agrium .
Shares in Europe closed lower on worries over the debt situations of euro zone countries.
On Tap This Week:
TUESDAY: New home sales, Richmond Fed Business Activity Survey, two-year Treasury note auction; Kansas City Fed President Thomas Hoenig speaks; Boeing Investor meeting; FDIC report on Q1 bank earnings.
WEDNESDAY: Mortgage applications, durable goods orders, oil inventories, five-year Treasury note auction; Minneapolis Fed President Narayana Kocherlakota speaks; USDA Food Prices Outlook, BlackRock shareholder meeting, ExxonMobil shareholder meeting, Yahoo investor day; earnings before-the-bell from Costco and Polo Ralph Lauren.
THURSDAY: GDP, USDA Agricultural Trade Outlook, jobless claims, corporate profits, natural gas inventories, seven-year Treasury note auction, money supply; earnings before-the-bell from Sony and Tiffany.
FRIDAY: Personal income and spending, consumer sentiment, and pending home sales.
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