NEW YORK — Stocks fell sharply moments after the opening bell Monday, tracking global equity markets lower as a political impasse in Greece heightened concerns about Europe's debt crisis and fears mounted about an economic slowdown in China.
The general move out of risky assets, such as equities and commodities, was likely to see the S&P 500 retest an important support level at 1,340 which, if broken, could result in a steeper pullback for the index.
Greece's president met little enthusiasm from political leaders on Monday to avert new elections, reinforcing fears the country was on the path to bankruptcy and an exit from the euro zone. The consequences of such an event are unknown. Investors fear it could prompt wider instability in Spain and Italy.
"The growing possibility of Greece saying bye bye has put the entire region into the realm of the unknown in terms of the economic ripple effects," said Peter Boockvar, equity strategist and portfolio manager at Miller Tabak in a note. "Spanish and Italian bond yields are spiking and the cost of insuring against a Spanish default is now more expensive than for Hungary."
Concerns about a slowdown in China have been troubling investors for several months. The decision of the world's second-largest economy on Saturday to cut the amount of cash banks must hold as reserves, normally seen as a pro-growth move, suggested the country may be facing more significant headwinds.
Moments after the opening bell, the Dow Jones industrial average was down 94.52 points, or 0.74 percent, to 12,726.08. The broader S&P 500 declined 11.66 points, or 0.86 percent, to 1,341.73. The tech-heavy Nasdaq fell 23.63 points, or 0.81 percent, to 2,910.19.
"The world markets are all sharply lower on mounting fears over euro land, Europe's potentially steepening recession and worries over a global slowdown," said Peter Cardillo, chief market economist at Rockwell Global Capital. "It's all about fear and whether or not the market may hold major support."
Three top executives involved with a failed hedging strategy that cost JPMorgan Chase & Co at least $2 billion and tarnished its reputation are expected to leave the bank this week, sources close to the matter said on Sunday. The shares were volatile premarket, last trading down 0.1 percent to $36.94 after losing 9 percent on Friday.
In merger news, Avon Products Inc. on Sunday said it told Coty Inc. that it would consider the smaller company's $10.7 billion takeover bid and it expected to respond within a week. The shares were trading up 4.5 percent at $21.10 in premarket.
Yahoo Inc. is replacing its CEO for the third time in as many years, and giving three board seats to a hedge fund led by Daniel Loeb, putting him in a strong position to influence strategy at the struggling Internet company. The stock rose 2.2 percent to $15.53.
AMR Corp , parent of American Airlines, bowed to pressure on Friday from its unsecured creditors, including its largest labor unions, and said it would explore merger options while it is still in bankruptcy.
Reuters contributed to this report.