July doesn't look so promising anymore.
The European debt crisis appears to be widening, with concerns about government debt defaults spreading beyond Greece to much larger countries like Italy and Spain. If that happens companies that do business internationally could see their revenue and profits decline as European countries and companies curtail purchases. What's more, a widespread financial crisis could cause a credit crunch in Europe and elsewhere.
The concerns sent stocks down. After a rally that sent markets up sharply the last two weeks of June, the Standard & Poor's 500 index dropped 24.31 points, or 1.81 percent, to 1,319.49 on Monday. The Dow Jones industrial average had its biggest percentage drop in nearly a month. It fell 151.44 points, or 1.20 percent, to 12,505.76. And after closing one point off its 2011 high late last week, the Nasdaq composite fell 57.19, or 2 percent to 2,802.62.
The S&P fell broadly, led by financial companies. Financial stocks in the index fell 2.8 percent as bank stocks sank. If Europe's debt crisis continues to spread, bank lending could seize up. Banks are also expected to report weak earnings beginning later this week.
Of the 500 companies in the S&P index, 492 fell.
The euro fell against the dollar and U.S. government bond prices rose. The euro fell below $1.40 for the first time since May 23 and hit a record low against the Swiss franc. The yield on the 10-year Treasury note fell to 2.95 percent from 3.02 percent late Friday.
The broadening of Europe's debt troubles follows disappointing U.S. employment news and a setback in negotiations over the country's borrowing limit. The government reported Friday that employers pulled back sharply on hiring in June, compounding fears that the U.S. economy was in even worse shape than previously thought. The unemployment rate rose to 9.2 percent.