Stocks kicked off the new month and quarter with a thud Monday, led by financials, as worries over Greece continued to spook investors and overshadowed a pair of better-than-expected economic news.
All three major averages closed at their lowest levels in over a year and the day's decline marks the worst start to October since 1998.
The Dow Jones Industrial Average tumbled 258.08 points, or 2.36 percent, to finish at 10,655.30, led by Bank of America and Alcoa .
Wal-Mart was the only gainer on the blue-chip index.
The S&P 500 dropped 32.19 points, or 2.85 percent, to end at 1,099.23. The Nasdaq plunged 79.57 points, or 3.29 percent, to close at 2,335.83.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, jumped near 45.
All S&P sectors were lower, led by financials and energy.
Stocks closed out the worst quarter in almost three yearslast week amid fears over the global recovery. For the quarter, the Dow and the S&P plunged more than 12 percent, while the Nasdaq tanked over 14 percent.
However, October still might be too early for investors to breathe a sigh of relief, as strategists say volatility will likely continue.
“Until we get some resolution out of Europe, the market’s going to keep bouncing back and forth,” Alan Valdes, director of floor operations and VP of trading at DME Securities. “I don’t see any change in volatility either.”
European shares finished lowerafter news Greece is likely to miss deficit targetsfor both this year and 2012 despite harsh new austerity measures and could be forced to seek more bailout funds, according to draft budget figures.
Deputy Finance Minister Pantelis Oikonomou said that Greece persuaded experts in the "Troika"—made of the IMF, EU and ECB—that the slippage was chiefly because of a deeper-than-expected recession.
Adding to woes, the contraction in manufacturing in the euro zone quickened in September, with new orders shrinking at their fastest pace since June 2009, according to a survey.
Gold prices rallied for a third session to trade above $1,650 an ounce as investors rushed into the precious metal as a safe-haven play.