U.S. stocks suffered their first serious losses of the year as European issues returned to the forefront; the S&P 500 fell 1.15% and the NASDAQ 1.5%. Political conditions in both Spain and Italy contributed to Monday's hand wringing.
- Spanish Premier Mariano Rajoy is facing opposition calls to resign amid contested reports about illegal payments, while Deutsche Bank AG said this year’s rally in Italian, as well as Spanish, bonds may falter as Italy’s Silvio Berlusconi narrowed the front-runner’s lead before elections this month.
- Spanish 10-year government yields jumped 23 basis points to 5.44%. Yields on similar-maturity Italian debt rose 14 basis points to 4.47%.
Crude oil dropped 1.6% to $96.17, gold added 0.35% to $1676.40, and silver fell 0.8% to $31.72.
Britain's FTSE 100 fell 1.6%, Germany's DAX 2.5%, and France's CAC-40 3.0%. In other markets Spain’s IBEX 35 Index tumbled 3.8%, the most since September, and Italy’s FTSE MIB Index plunged 4.5% in its biggest slide since August.
- Allegations of secret cash payments to Spanish Prime Minister Mariano Rajoy and other leaders of his party sent the country's stock market down. Mr. Rajoy pledged over the weekend to disclose his tax returns and financial assets this week in a bid to quell the scandal.
Asian markets closed before most of the damage was done in the West; Japan's Nikkei gained 0.6% and China's Shanghai 0.4%.
- China’s services industries grew at the fastest pace since August as gains in retailing and construction aid government efforts to drive a recovery in the world’s second-biggest economy. The non-manufacturing Purchasing Managers’ Index rose to 56.2 in January from 56.1 in December. A reading above 50 indicates expansion.