Stocks opened lower Monday amid heightened concerns that Greece is not doing enough to avoid default grow and as European banks hit their lowest level since March 2009.
The Dow Jones Industrial Average fell at the open, led by JPMorgan and Caterpillar after closing firmly in the redlast week.
The S&P 500 and the Nasdaq also tumbled. The CBOE Volatility Index, widely considered the best gauge of fear in the market, traded above 42.
All 10 S&P sectors were lower, led by energy and industrials.
With no major economic data or earnings report due in the U.S., the focus is likely to remain on developments in Europe.
European shareshit a 26-month low on Monday. French banks, which are particularly exposed to sovereign peripheral debt, fared the worst.
Theresignation of the European Central Bank’s chief economist Juergen Starkon Friday also undermined confidence, with speculation rife that his departure will further complicate the response to the debt crisis.
In the UK, along-awaited reportby the Independent Commission on Banking said that British banks should ring-fence their retail operations from riskier investment banking units.
The European banks' selloff also dragged U.S. financials lower. Shares of Bank of America , Citigroup both fell almost 4 percent.
In addition, JPMorgan CEO Jamie Dimon said the U.S. should consider pullion out of the Basel group of global regulators, calling the new capital rules as "anti-American," in an interview with the Financial Times.
Meanwhile, widely-followed banking analyst Dick Bove of Rochdale Securities said fears of a possible impact of a European debt crisis on U.S. banks were overblown, with only Citigroup