The Dow Jones Industrial Average dropped 163 points, or 1.3%, to 12349 in early trading, with all components in the red as investors fled to safer assets. The Standard & Poor's 500 stock index slumped 18 points to 1315, with energy and materials stocks hit hardest. The technology-heavy Nasdaq Composite lost 51 points to 2752.
Both the blue-chip index and the S&P 500 have slid for three straight weeks, marking their longest losing streak since August. Though lengthy, the slide had been relatively shallow heading into the week. The Dow was down 2.3% in the three-week period that ended Friday.
European bourses were broadly lower Monday after Standard & Poor's cut its outlook on Italy's credit rating to negative from stable over the weekend. Adding to the negative, Spain's ruling Socialist party suffered heavy losses in regional elections. Nor did it help that Iceland's most-active volcano erupted, restricting flights over the island and raising the specter of another round of European airline disruptions.
"The Euro-zone nations are walking a fine line," said Malcolm Polley, president and chief investment officer at Stewart Capital Advisors. Too much austerity could choke off spending and weaken the continent's economic recovery, he said, even as markets around the world clearly demand that Euro-zone countries get their debt burden under control.
Besides the overseas news, there were also a handful of domestic items likely to weigh on the stock market Monday, Polley said, such as accusations that Bank of New York Mellon took advantage of clients while trading currencies, plus state attorneys generals' renewed effort to investigate the mortgage industry.
Elsewhere, Asian markets also dropped after a business survey showed Chinese manufacturing expanded at the slowest pace in 10 months in May. The Shanghai Composite shed nearly 3%.
The U.S. dollar rallied versus the euro, the British pound and the yen.
There were no major economic indicators scheduled for release Monday to deflect investors' attention from the overseas news.
In corporate news, Campbell Soup reported fiscal third-quarter earnings and revenue that were above forecasts; shares shed 0.4% despite the report.
Krispy Kreme rallied 16% in premarket trading after the doughnut chain's fiscal first-quarter results bested forecasts.
Crude oil futures slid near $97 a barrel while gold futures rose a fraction to $1,509 an ounce For the latest updates PRESS CTR + D or visit Stock Market news Today
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