Stocks trimmed their losses but still ended in the red Monday, with the S&P 500 down almost 4 percent from its 2012 highs, weighed by political and economic worries in the euro zone.
“We’ve decisively broken through a key level of 1,375 [on the S&P 500] and I wouldn’t be surprised to see us test 1,350,” said Kenny Polcari, managing director at ICAP Equities.
The Dow Jones Industrial Average tumbled 102.09 points, or 0.78 percent, to close at 12,927.17, led by Wal-Mart and Bank of America . The blue-chip index was down more than 180 points at its session low.
ExxonMobil rose on the Dow after Raymond James upgraded the energy giant to "outperform" with a $100 price target.
The S&P 500 declined 11.59 points, or 0.84 percent, to finish at 1,366.94. The Nasdaq erased 30.00 points, or 1.00 percent, to end at 2,970.45.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, briefly spiked above 20 earlier in the session before finishing near 19.
All 10 S&P sectors ended lower, led by materials and consumer staples.
“If you’re sitting on cash, you want to wait for the consolidation to pass,” advised Quincy Krosby, market strategist at Prudential Financial on CNBC’s "Power Lunch." “We always talk about how the market needed to pull back, then when you finally have it, everyone gets nervous.”
Krosby said she remains “constructive” on the U.S. market and expects investors to pile in once the market volatility diminishes.
In Europe, French President Nicolas Sarkozy finished second in the first round of elections in France, trailing his rival, Socialist leader Francois Hollande. It is the first time an incumbent French president has come in second in the first-round vote in the present electoral system’s 54-year history. The second round will be held in two weeks.
Meanwhile, budget talks in the Netherlands fell apart over the weekend, raising concerns over the country's ability to hold its triple-A credit rating and prompting Prime Minister Mark Rutte to resign from his post. AndGermany's manufacturing sector unexpectedly declined at the fastest pace in nearly three years in April.
China's factories posted their best performance this year as a measure of new business rose from multi-month lows, according to a PMI survey, though overall activity still contracted for a sixth month.
Wal-Mart plunged after bribery allegationsat the big-box retailer's Mexican affiliate surfaced over the weekend. The company could see years of regulatory scrutiny and some executives could eventually lose their jobs. Still, Citigroup raised its price target on the retail giant to $71 from $69 a share.
Kellogg's slumped after the breakfast food and snack company warned that its full-year performancewould be lower due to disappointing first-quarter performance.
Apple slipped, flirting with its 50-day moving average of $570 a share. Apple entered correction territory last Friday and is due to report quarterly results after Tuesday's closing bell.
Xerox and SunTrust were among the few companies trading in positive territory. Xerox handed in a positive forecast, while SunTrust posted earnings that surged almost 40 percent from a year ago.
Netflix and Texas Instruments are scheduled to post earnings after-the-bell.
Facebook said it will pay Microsoft $550 million in cashfor hundreds of patents that the tech giant recently acquired from AOL .
On the M&A front, Nestle will acquire Pfizer's infant nutrition business for $11.85 billion, beating out French rival Danone.
AstraZeneca has agreed to buy U.S. biotech company Ardea Biosciencesfor $1.26 billion, giving it access to a new drug for treating gout patients, in AstraZeneca’s latest deal to try and bolster its drug pipeline.
And Beam will buy Pinnacle Vodka and rum brand Calico Jack from White RockDistilleries in a deal worth around $600 million in cash.
—Follow JeeYeon Park on Twitter: @JeeYeonParkCNBC—
Coming Up This Week:
TUESDAY: S&P Case-Shiller home price index, new home sales, consumer confidence, FHFA home price index, 2-yr note auction, FOMC meeting begins, IBM shareholders meeting, Wells Fargo shareholders meeting; Earnings from AT&T, 3M, Unite Tech, US Steel, Amgen, Apple, Baide, Aflac
WEDNESDAY: Weekly mortgage apps, durable goods orders, oil inventories, FOMC meeting announcement, 5-yr note auction, Bernanke press conference, Coca-Cola shareholders meeting, GE Shareholders meeting, Hudson City shareholders meeting, USDA food prices outlook; Earnings from Boeing, Caterpillar, Eli Lilly, GlaxoSmithKline, AutoNation, Delta, Credit Suisse, Motorola Solution, Sprint, Akamai
THURSDAY: Jobless claims, Chicago Fed nat'l index, pending home sales index, 7-yr note auction, J&J shareholders meeting; Earnings from AstraZeneca, Bristol-Myers Squibb, Chrysler, ExxonMobil, PepsiCo, Royal Dutch Shell, Barclays, Pulte, Amazon.com, Starbucks, Zynga
FRIDAY: GDP, employment cost index, consumer sentiment; Earnings froM Chevron, Merck, P&G
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