Stocks Skid Amid Eurozone Uncertainties; S&P Falls 1.2%
NEW YORK ( TheStreet) -- Major U.S. stock averages slumped Monday, dragged down by political uncertainties in Europe and disappointing factory orders here at home.
Spain's opposition Socialist Party urged Prime Minister Mariano Rajoy to step down over corruption allegations, which he has refuted. An external investigation on the matter is expected to begin in a few weeks. The Spanish prime minister and German Chancellor Angela Merkel were to meet in Berlin Monday ahead of the European Union leaders' summit in Brussels later this week.
In Italy, former Prime Minister Silvio Berlusconi is experiencing mounting popularity, potentially interfering with reforms carried out by the incumbent technocrat government. Italy's general elections are scheduled to start in late February.
Amid the news, the yield on the Spanish 10-year bond soared to its highest level since December at 5.3%. The DAX in Frankfurt declined 2.5% and the FTSE in London fell 1.6%.
The Dow Jones Industrial Average plunged 102 points, or 0.7%, to 13,908.
Microsoft was down 1.4%. Negotiations on buying out Dell (DELL) continued over the weekend, with reports saying a deal could be achieved in a matter of days. CEO Michael Dell, private-equity firm Silver Lake Partners and Microsoft are reportedly the buyers. Dell shares were down more than 2.5%.
Chevron(CVX) also slumped.
Chevron was downgraded to "neutral" from "buy" at UBS on a valuation basis. Shares fell 1.1%.
All sectors in the broad market were in the red. The heaviest decliners were energy, conglomerates, financials and technology.
Volumes were at 3.36 billion shares on the New York Stock Exchange and 1.86 billion shares on the Nasdaq. Decliners were outnumbering advancers by a ratio of 3.6-to-1 on the Big Board and 3.3-to-1 on the Nasdaq.
The Dow broke 14,000 on Friday for first time since 2007 and logged the longest weekly winning streak since the six-week period ended Aug. 17.
"In our view, we believe stock prices can continue to rise, but we would encourage selectivity when investing," a BlackRock note said. "We continue to favor emerging markets (including China) and mega-cap U.S. stocks, which should benefit from the improvements in the global economy."
"Given the strong market internals, we believe both the Dow and the S&P 500 will retest its 2000/2007 in coming weeks," Piper Jaffray's technical research team said in a morning note. "Our intermediate-term market timing gauges remain in buy positions and our short-term gauges are close to being overbought," the team added.