Stocks Snap Winning Streak

P&G shares fell 1.3% after the company was downgraded to perform from outperform at Oppenheimer & Co., which expressed frustration with the consumer products giant after last week's quarterly report and lowered outlook.

"The company appears to have been disproportionately impacted by sluggish market growth, exacerbated by market share losses which imply P&G's problems are more structural in nature," said the firm, which also removed its $75 price target. "While we expect some incremental improvement in trends, the company is likely to remain growth-challenged and no longer warrants the benefit of the doubt."

Apple(AAPL) weighed on the broad markets on Monday with the shares losing more than 3% following a report over the weekend in the The New York Times that criticized the company's taxpaying practices.

In the broad market, losers outpaced winners by a nearly 2-to-1 ratio on both the New York Stock Exchange and the Nasdaq. The VIX, which measures market volatility through options activity in the S&P 500, jumped 5% to settle at 17.15. A move above 20 is viewed as indicative of rising market fear.

Before the bell, the Commerce Department posted slightly better-than-expected personal income data for March along with a slight miss on personal spending for the period. Income rose 0.4%, compared with the 0.3% rise expected by economists surveyed by Thomson Reuters.

Personal spending was up 0.3%, compared with 0.4% improvement expected by economists. In February, income rose by an upwardly-revised 0.3% and spending increased by an upwardly-revised 0.9%.

The consumer data was followed by a worse-than-expected read on Chicago-area business activity. The April Chicago purchasing managers index registered a bigger than expected fall to 56.2 in April, from 62.2 in March, according to the Institute for Supply Management Chicago. Economists were expecting the business barometer to fall to 61, according to a Thomson Reuters survey. The barometer has now fallen for a second straight month, with production at its lowest level since Sept. 2009.

London's FTSE fell 0.7% and Germany's DAX was down 0.6% as Spain headed towards a recession.