Forexpros – U.S. stocks opened sharply lower on Monday, as ongoing euro zone debt concerns continued to weigh on investor confidence, while markets eyed a key European Union summit later in the week for signs of progress in tackling the region’s financial crisis.
During early U.S. trade, the Dow Jones Industrial Average tumbled 1.13%, the S&P 500 index plummeted 1.39%, while the Nasdaq Composite index plunged 1.26%.
Market sentiment weakened broadly amid growing doubts over whether European leaders will make any progress towards greater fiscal integration and allowing the bloc’s rescue funds to buy government debt at a summit meeting due to begin on Thursday.
Meanwhile, fears that the debt crisis in the euro area is creating a drag on global growth continued to weigh, following a string of data last Thursday which pointed to weak U.S. manufacturing activity, a shrinking Chinese manufacturing sector and slowing business activity across the single currency bloc.
Earlier Monday, Spain’s government formally requested aid of up to EUR100 billion for its banking sector from its euro zone partners. Spain’s economy minister said the amount should be enough to cover the needs of all banks and provide an additional security buffer.
Financial stocks were broadly lower, as euro zone debt worries continued to plague U.S. markets. Shares in Bank of America plummeted 4.03% and Citigroup dove 3.97%, while JP Morgan and Goldman Sachs tumbled 3.41% and 2.29% respectively.
The U.S. lenders were among the 15 global banks downgraded last week by Moody’s Investors service, citing the increased chance of “outsized losses”.
Morgan Stanley, which was also downgraded, saw shares drop 4.24% after Brazilian authorities said they want the investment banking giant to return about USD54 million associated with a stock sale by shareholders of troubled lender Banco Cruzeiro do Sul, which was seized by the central bank this month.
Energy stocks were also sharply lower amid growing global growth concerns. Chesapeake Energy sank 6.07% and Exxon Mobil plummeted 2.74%, while Chevron saw shares tumble 1.73%.
Elsewhere, Research In Motion, which is scheduled to report quarterly earnings later this week, plunged 3.10% after saying it is considering separating out its handset manufacturing business from its messaging network, according to a report in the Sunday Times.
Also in the tech sector, Hewlett Packard, the world’s largest personal computer maker, retreated 1.03% after announcing that it may cut as many as 1,000 jobs in Germany as part of planned European-wide redundancies.
Meanwhile, Apple shares dropped 0.56%, as Samsung Electronics Co said it expects sales of its new Galaxy S III, launched at the end of last month as a main rival to Apple’s iPhone, to top 10 million during July, making it the South Korean group’s fastest selling smartphone.
On the upside, Watson Pharmaceuticals was up 2.66% after U.S. regulators ruled against Shire in a battle over generic copies of its hyperactivity drug Adderall XR, approving a cut-price version of the medicine from Watson Pharmaceuticals’ Actavis unit.
Other stocks in focus included Apollo Group, Symex and H.B. Fuller, all due to report quarterly earnings after the closing bell.
Across the Atlantic, European stock markets were sharply lower. The EURO STOXX 50 plunged 2.30%, France’s CAC 40 tumbled 2.20%, Germany’s DAX plummeted 1.81%, while Britain’s FTSE 100 dropped 1%.
During the Asian trading session, Hong Kong’s Hang Seng Index dipped 0.2%, while Japan’s Nikkei 225 Index declined 0.7%.
Later in the day, the U.S. was to release official data on new home sales.
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