US stocks fell on Monday, with Bank of America, Caterpillar and Alcoa among the decliners as investors continued to worry about European sovereign debt while data on US consumer spending also sparked concerns about the economic recovery.
The Dow Jones Industrial Average fell 115.48 points (1.16%) to 9,816.49, its lowest close since Nov. 4. The Dow is now below the intraday low it hit during the May 5 "flash crash."
Bank of America was the Dow's worst performer with a drop of 52 cents (3.4%) to $14.83. The decline came as Countrywide Home Loans, a unit of Bank of America, agreed to pay $108m to settle federal charges it collected excessive fees from homeowners who were struggling to keep their homes. As part of the settlement, the company didn't admit or deny the allegations.
Caterpillar was also particularly weak with a decline of $1.93 (3.3%) to $55.83. Caterpillar exports to Europe, and investors are concerned about how its profitability may be impacted by currency translations given the euro's weakening against the US dollar. On Monday, the US dollar gained 0.41% versus the euro to its highest level since March 2006.Alcoa fell 33 cents (3%) to $10.51. Investors have been fretting over how demand for the aluminium giant's products could be affected if China keeps trying to rein in its growth.
Just a handful of the Dow's components rose on Monday. Among them, AT&T advanced 15 cents (0.6%) to $24.32, after the telecommunications giant changed its upgrade policy to allow more of its customers to purchase the newest version of Apple's iPhone sooner. Apple introduced the iPhone 4, adding new features it hopes will fuel the smartphone's growth and further solidify the company's leadership in the mobile-device market.
Nonetheless, Apple, which isn't a Dow component, slid $5.02 (2%) to $250.94.
The Nasdaq Composite dropped 45.27 (2.04%) to 2,173.90, its lowest close since Feb. 10.
In addition to Apple, the Nasdaq was weighed down by a decline in Google, which dropped $13.20 (2.7%) to $485.52. Australia launched a police investigation into whether Google breached privacy laws while collecting information for its online mapping service. Australia's actions come as a number of European countries have said they are also considering investigations. Also weighing on Google, Microsoft's Bing search engine will be available on iPhone 4, though Google's search engine would remain the default. Nevertheless, Microsoft slipped 50 cents (1.9%) to $25.29.
The Standard & Poor's 500 index declined 14.41 (1.35%) to 1,050.47, its lowest close since Nov. 4. The industrial and financial sectors led the S&P's slide, with utilities the only sector that managed to avoid a drop.
The declines came as investors continued to fret over sovereign-debt issues in Europe, with Hungary the latest concern despite its leaders over the weekend stressing that the country isn't facing sovereign credit default.
Investors also grew concerned about US consumer spending after the Federal Reserve released data painting a mixed picture of consumer borrowing in the US. Such activity unexpectedly rose in April but fell in March, suggesting Americans weren't comfortable with their finances despite the budding economic recovery.
For Australian ADRs listed on the NYSE, BHP Billiton dropped $1.27 (2.13%) to US$58.44, Rio Tinto Plc shed 60 cents (1.37%) to US$43.28, ResMed lost $1.49 (2.31%) to US$62.94, Telstra Corporation dipped 17 cents (1.36%) to US$12.30, Telecom Corporation of NZ declined 17 cents (2.73%) to US$6.06 and Westpac slid $2.00 (2.19%) to US$89.20.
In economic news, The Conference Board said that its May employment trends index rose 0.6% to 95.7 from April's revised 95.2, first reported as 94.7. The index has risen for nine consecutive months and is up almost 9% from a year ago.
Consumer borrowing rose by a seasonally adjusted annual rate of 0.5% to $2.440tr in April, but fell in March, suggesting Americans aren't too comfortable with their finances despite the economic recovery.
At 7:45 AM (AEST), the 10-year Treasury note yield was 3.14% and the five year yield was 1.93%.
European shares lost ground again on Monday, with mineral extractors among the worst performers as investors fretted about global growth trends.
The Stoxx Europe 600 index declined 1% to 242.20.
In the basic resources sector, shares of Kazakhmys surrendered 4% while Xstrata lost 3.4%.
The German DAX index lost 0.6% to 5,904.95, holding up better than the other benchmarks. The French CAC-40 index declined 1.2% to 3,413.72 and the UK's FTSE 100 index declined 1.1% to 5,069.06.
Among the advancers in Europe, Adidas shares added 2%. Analysts upgraded the German sportswear group to buy from hold, saying a combination of strong operating performance and favourable currency translations should result in higher profit.
Shares of Finmeccanica rose 0.2%. Boeing Co. said it will submit an entry to build the next generation of US presidential helicopters with AugustaWestland, a unit of Finmeccanica. Last year, the presidential helicopter program was cancelled due to cost overruns.
In deals-related action, shares of Grifols declined 9.7% after it said that it will buy biotechnology firm Talecris Biotherapeutics for $3.4bn in cash and stock.
Also lower, shares of UK insurer Prudential declined 4%. The firm mounted a robust defence of its failed bid for American International Group's Asian assets and reported a 27% rise in sales on Monday.
On the FTSE 100, Rio Tinto slipped 64.00 pence (2.05%) to 3,028.72 pence and BHP Billiton weakened 36.00 pence (2.03%) to 1,728.75 pence.
Japanese shares tumbled on Monday to lead Asian markets sharply lower as weak US jobs data and Hungary's fiscal woes sapped risk-appetite, also sending the euro to multi-year lows against the US dollar and the Japanese yen.
Japan's Nikkei Stock Average finished at 9,520.80, tumbling 3.8% for its worst daily percentage loss of this year. Hong Kong's Hang Seng Index lost 2.0%, while China's Shanghai Composite fell 1.6%.
Base metals ended mostly lower in a volatile session on the London Metal Exchange, tracking moves in the euro and equity markets. Aluminium fell $5 (0.27%) to $1,875 while copper weakened $115 (1.84%) to $6,125 and nickel rose $380 (2.10%) to $18,445. Zinc dropped $25 (1.51%) to $1,630 and lead shed $35 (2.19%) to $1,560. Comex copper was last quoted at 274.75 US cents per pound.
Gold rallied to within inches of its US-dollar record and beat its all-time high in euros as investors increasingly buy the metal as a hedge against financial deterioration in the euro-zone. Spot gold was last quoted at $1,240.95. Comex gold futures strengthened $30.80 (2.55%) to $1,240.80. Spot silver was last quoted at $18.09.
Crude fell slightly on worries of a slowing economic recovery and an oversupplied US market. West Texas Intermediate was last quoted at US$71.44 per barrel.
At 07:45 a.m. (AET) the US dollar was quoted at 0.8389 euros, 91.48 yen, 1.236 AUD and 69.11 pence.