(CNBC) – Stocks were down sharply across the board Monday, fueled by fears that Spain will need a full sovereign bailout and mounting worries that Greece may leave the euro.
The Dow Jones Industrial Average plunged almost 200 points, led by Alcoa [AA 8.089 -0.171 (-2.07%) ] and Microsoft [MSFT 29.115 -1.00 (-3.32%) ].
The S&P 500 and the Nasdaq also dropped sharply. The CBOE Volatility Index, widely considered the best gauge of fear in the market, surged almost 25 percent to trade near 20.
All 10 S&P sectors were firmly in negative territory, led by techs and materials.
The Dow, S&P 500 and Nasdaq are now lower for the month of July.
A number of regional governments in Spain are set to request central government aid, heightening fears that the country will require a full-scale bailout. Spanish bonds yields surged to their highest levels since the euro was created in 1999.
Euro zone finance ministers approved terms for a loan of up to 100 billion euros for Madrid to recapitalize its banks last week.
Adding to woes, Spain’s economy contracted in the second quarter.
Concerns over Greece also returned amid worries that the IMF may no longer provide financial aid to the debt-ridden nation, according to a report in Germany’s Der Spiegel, sparking fears the country could run out of money as early as September. And Greece’s Prime Minister Antonis Samaras warned that the country was facing a new “Great Depression.”
European shares plunged and the euro hit a new two-year low against the dollar.
Financials, one of the most sensitive sectors to Europe, slumped heavily. Shares of Goldman Sachs [GS 91.89 -2.27 (-2.41%) ], Citigroup [C 25.185 -0.685 (-2.65%) ] and Morgan Stanley [MS 12.535 -0.245 (-1.92%) ] were all trading lower.
JPMorgan [JPM 34.345 0.445 (+1.31%) ] rebounded following news that CEO Jamie Dimon bought 500,000 shares last week for $17.1 million.
Brent crude fell below $103 a barrel, while gold prices dropped almost 1 percent.
Among earnings, McDonald’s [MCD 89.25 -2.33 (-2.54%) ] dropped after the fast-food giant reported quarterly results that missed expectations.
Halliburton [HAL 31.47 0.70 (+2.27%) ] tumbled even after the oilfield services company posted a better-than-expected profit, thanks to higher international drilling activity.
Meanwhile, Hasbro [HAS 35.10 1.26 (+3.72%) ] gained after the toymaker reported better-than-expected earnings on better inventory management and market share gains.
Texas Instruments [TXN 26.63 -0.62 (-2.28%) ] and Baidu [BIDU 105.86 -4.37 (-3.96%) ] are slated to report earnings after the closing bell.
On the M&A front, GenOn Energy [GEN 2.29 0.47 (+25.82%) ] surged after NRG Energy [NRG 19.63 1.58 (+8.75%) ] said it will buy the power producer for $1.7 billion in stock.
Canada’s Nexen [NXY 25.759 8.699 (+50.99%) ] skyrocketed after China’s oil producer CNOOC [CEO 194.90 -7.85 (-3.87%) ] agreed to buy the company in a deal worth about $15 billion.
And RailAmerica [RA 27.2309 2.4209 (+9.76%) ] jumped after Genesee & Wyoming [GWR 56.07 0.09 (+0.16%) ] said it will buy the railroad operator for $1.39 billion in cash.
Wet Seal [WTSLA 2.565 -0.395 (-13.34%) ] plunged after the teen retailer fired its CEO Susan McGalla without naming a replacement amid declining sales.