Stocks declined on Monday, trimming the biggest monthly advance since 1987 for the S&P 500, amid concern European leaders will struggle to raise funds to contain the region’s sovereign debt crisis.
The Dow Jones industrial average closed down 276.10, or 2.26%, at 11,955.01; the S&P 500 fell 31.79, or 2.47%, ending at 1,253.30; and the Nasdaq composite closed down 52.74, or 1.93%, at 2,684.41. All numbers are preliminary.
Stocks rose last week after European leaders agreed to expand the region’s bailout fund and U.S. economic growth accelerated.
China can’t play the role of “savior,” the official Xinhua news agency said Sunday, as investors awaited the country’s response to Europe’s request for money to boost its bailout fund.
Group of 20 leaders will gather Thursday and Friday in Cannes, France, while central bankers from the U.S., Australia, and Europe will hold interest-rate policy meetings this week. The Organization for Economic Cooperation and Development urged Group of 20 governments and central banks to “act decisively” to restore confidence as it lowered its growth forecasts for the U.S. and the eurozone.
European stocks slumped, paced by losses in banks, as Italian and Spanish bonds declined. Also, MF Global Holdings filed for Chapter 11 bankruptcy protection after making bets on European sovereign debt.
“The spike in the yield on the Italian note coupled with the actions to ring fence MF Global put investors back on the defensive,” Peter Sorrentino, a senior fund manager at Huntington Asset Advisors, which oversees $14.5 billion of assets, said in an e-mail. “This morning’s report of a decline in the Chicago business barometer reminded all that the economic fundamentals are still tenuous.”
The Institute for Supply Management-Chicago said its business barometer decreased to 58.4 in October from 60.4 the prior month. A level of 50 is the dividing line between expansion and contraction.