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Wall St falls on waning EU summit hopes

NEW YORK - US stocks tumbled on Monday as investors saw few reasons to buy equities ahead of a European Union summit this week that many fear will not calm the escalating euro zone debt crisis.

Energy shares led declines on the S&P 500 as US crude futures dropped 1.7 percent a barrel to $78.40, near last week’s eight-month low.

Spain formally requested euro zone rescue loans for up to 100 billion euros ($125 billion) to recapitalize its banks, saying the final amount of assistance would be set at a later stage. Some market economists say it is merely a prelude to a full bailout for Spain.

Spanish government bonds came under pressure with the 10-year bond yield 18 basis points higher at 6.53 percent, near the 7-percent mark that forced other indebted European countries to ask for bailouts.

Markets continue to react to European headlines as the spiraling debt crisis in Europe could further hurt an already weak global economy. Austerity measures pushed forward by Germany have Greece mired in a long recession, and investors worry Spain could follow Greece’s path as Madrid’s borrowing costs remain stubbornly high.

Traders were also on high alert as the US Supreme Court is expected to rule on the constitutionality of a massive healthcare sector reform pushed forward by US President Barack Obama and signed into law in March 2010.

“When you have big potentially market-moving events and it’s difficult to tell which way they are going to go, traders tend to be sellers. They figure they can ride momentum if they are wrong, but they want to be protective if the news is negative,” said Jack de Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire.

The Dow Jones industrial average fell 166.99 points, or 1.32 percent, to 12,473.79. The S&P 500 Index dropped 21.73 points, or 1.63 percent, to 1,313.29. The Nasdaq Composite lost 51.95 points, or 1.80 percent, to 2,840.47.

A European equity benchmark fell more than 1 percent and the dollar, seen as a safe-haven when European markets are volatile, rose as worries about faltering global growth lingered after last week’s soft manufacturing data worldwide.

The market barely reacted to data showing new US single-family home sales surged in May to a seasonally adjusted 369,000-unit annual rate, the highest since April 2010, and prices rose from a year ago amid tightening supply.

Under the direction of Chief Executive Aubrey McClendon, Chesapeake Energy Corp plotted with its top competitor to suppress land prices in one of America’s most promising oil and gas plays, a Reuters investigation has found. Chesapeake shares dropped 5.8 percent to $17.53.

Shares of Bristol-Myers Squibb Co fell 3.4 percent and Pfizer Inc lost 1.4 percent after the companies announced their closely watched blood clot preventer failed to win approval from US health regulators.