Wall Street stocks fell more than 1 percent on Monday as Germany's finance minister dimmed hopes an upcoming summit would result in a breakthrough in Europe's debt crisis.
Optimism the euro zone was making progress in resolving its sovereign debt crisis has pushed the S&P 500 to the top of a two-month trading range but left it vulnerable to pullbacks. The index had risen for two straight weeks for the first time since July and recorded its best two-week performance since 2009.
The past couple of weeks have been obviously a phenomenal little run-up. The problem is it's a delicate run-up, said Chris Hobart, chief executive of Hobart Financial Group in Charlotte, North Carolina.
German Finance Minister Wolfgang Schaeuble said European Union governments would adopt a five-point plan at the Brussels meeting on October 23, but we won't have a definitive solution this weekend, he added.
Schaeuble's comments also sent the euro lower against the dollar and weighed on financials. The KBW bank index <.BKX> lost 2.6 percent. Compounding pressure on the sector were disappointing earnings from Wells Fargo & Co
What we are looking at today in the market is obviously a direct correlation to what is going on in Europe, said Hobart.
Everything seems to be going well with Europe for a while, and you get this little news and it reconfirms the fears that everybody has.
The Dow Jones industrial average <.DJI> dropped 162.84 points, or 1.40 percent, to 11,481.65. The Standard & Poor's 500 Index <.SPX><.INX> lost 15.55 points, or 1.27 percent, to 1,209.03. The Nasdaq Composite Index <.IXIC> declined 39.89 points, or 1.50 percent, to 2,627.96.
Events in Europe overshadowed a $21 billion deal by Kinder Morgan Inc
El Paso's shares surged 23.8 percent to $24.25 and Kinder Morgan shares jumped 6.4 percent to $28.62.
In its quarterly results, Wells Fargo missed Wall Street's earnings estimates by 1 cent a share as interest income fell below expectations.
Shares of Citigroup Inc
Of the 45 companies in the S&P 500 that have reported earnings, 62 percent have beaten analyst expectations, according to Thomson Reuters data.
(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)