NEW YORK (Reuters) – Stocks fell sharply on Monday, putting the SP 500 near break-even for June so far, as investors saw little reason to be optimistic about a European Union summit this week.
Markets remain sensitive to European headlines as the region’s spiraling debt crisis could wreak further havoc on a slowing global economy.
Financial and energy stocks were among the primary drags. U.S. crude futures lost 0.7 percent to remain near the eight-month low hit last week. News that Spain had requested help for its struggling banks pressured financial stocks.
The PHLX oil service sector index dropped 3.4 percent and the KBW bank index slumped 2.7 percent.
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.
“Last week we were very hopeful that they were moving forward and the meetings this week would have a positive ending. Today there is a lot of doubt the EU summit will generate anything substantial,” said Gail Dudack, chief investment strategist for Dudack Research Group in New York.
Austerity measures pushed forward by Germany have Greece mired in a long recession. Investors worry Spain could be the next