U.S. stocks fell more than 1 percent on Monday as political turmoil in Europe cast doubts on the bloc's ability to push through measures to end its debt crisis and as Wal-Mart sank following a report it stymied a bribery probe.
The Dutch prime minister tendered his government's resignation on Monday after Dutch officials failed to agree on budget cuts. Adding to the uncertainty was a Sunday vote in France that threw the presidential race wide open.
The renewed worries came as the euro zone's business slump deepened at a far faster pace than expected in April.
Europe's debt crisis has been a major headwind for U.S. equities as investors worried it may hurt corporate profits. Bank shares were hit by the concern, including Morgan Stanley
Wal-Mart Stores Inc
The sell-off was broad with about six stocks on the New York Stock Exchange falling for each one that rose, and the economically sensitive S&P materials sector <.GSPM> was the among the worst performing areas, down 1.9 percent.
We're in a period now where the market seems to be consolidating gains from the first and fourth quarter, and we're going back and forth, said Hank Smith, chief investment officer at Haverford Trust Co. in Philadelphia.
It's becoming clear the euro zone is in a recession, and that brings a lot of concerns. To really get out of the debt problem, you need growth, and we haven't gotten to that step yet, he said.
The Dow Jones industrial average <.DJI> was down 134.86 points, or 1.04 percent, at 12,894.40. The Standard & Poor's 500 Index <.SPX> was down 13.92 points, or 1.01 percent, at 1,364.61. The Nasdaq Composite Index <.IXIC> was down 34.45 points, or 1.15 percent, at 2,966.00.
Materials shares followed a fall in commodity prices as copper dropped 2 percent. Shares in Freeport McMoran Copper & Gold Inc
The majority of S&P 500 results for the first quarter has been positive so far, however, with 79 percent of companies beating expectations.
(Additional reporting by Edward Krudy; Editing by Padraic Cassidy)