June 25, 2012 at 4:05 PM ET
Stocks tumbled at the opening bell Monday and never recovered. Investors fed up with the eurozone’s attempts to get its books in order and cynicism about yet another summit on the issue helped keep shares down.
According to preliminary calculations, the Dow Jones industrial average ended 138.12 lower, or 1.09 percent, to 12,502.66. The S&P 500 was off 21.30, or 1.60 percent, to 1,313.72. The Nasdaq fell 56.26, or 1.95, to 2,836.16.
In Europe, Spain formally asked for help to rescue the country's ailing banks, but its request left many questions unanswered, including how much it needs of the 100 billion euro ($124 billion) loan package offered by other European governments. The uncertainty unsettled markets, pushing borrowing costs higher for Spain's government. Spain's stock market plunged 3.7 percent.
Stocks of big U.S. banks slumped. Many analysts expect banks in Europe and the U.S. to suffer from a freeze-up in Europe's financial system if Spain fails to rescue its troubled banks. Spain's banks have been hobbled by loans made during a real-estate bubble, and the government has been inconsistent about how much help it will need to save them.
"Right now it's all about Europe, and confidence is pretty low," said Doug Cote, chief market strategist for ING Investment Management. "The policies that they proposing are too little too late."
Markets continue to react to European headlines as the spiraling debt crisis in Europe could further hurt a slowing global economy. Austerity measures pushed forward by Germany have Greece mired in a long recession. Investors worry Spain could follow Greece's path as Madrid's borrowing costs remain stubbornly high.
Expectations for the two-day summit, which starts on Thursday, are low after Germany resisted pressure for common euro zone bonds or a flexible use of Europe's rescue funds at a meeting of the region's four biggest economies last week.
"What the market wants is action," Cote said. He said investors wanted to see steps toward binding the weak and stronger economies closer together.
Below, John Rutledge of Rutledge Capital, discusses worries investors have about slowing global growth with CNBC. Rutledge says that although China’s economy is losing steam, the country will not see a hard landing.
Reuters and Associated Press contributed to this report.