“The market appears to be discounting a Greek exit from the euro,” said Linda Duessel, senior equity strategist at Federated Investors Inc.
The Dow Jones Industrial Average (US:DJIA) ended down 125.25 points, or 1%, at 12,695.35, its lowest close since Jan. 31, after Greek politicians over the weekend failed to reach an agreement on a unity government, raising the likelihood of new elections and the risk of halted international aid payments.
J.P. Morgan Chase & Co. (US:JPM) led decliners on the Dow, with a drop of 3.2%, followed by a 2.6% drop in Bank of America Corp. (US:BAC) shares.
Ina Drew became the first high-ranking casualty of the scandal that has put a dent in J.P. Morgan’s reputation, with the bank saying that the chief investment officer is resigning after more than 30 years with the bank. Read more about Drew’s exit from J.P. Morgan after trading losses.
J.P. Morgan’s $2 billion trading loss sharpens the battle over financial regulation, with presumed Republican presidential nominee Mitt Romney favoring the repeal of the Dodd-Frank law, which is supported by President Barack Obama. It also prompted Elizabeth Warren, the Massachusetts Democrat running for U.S. Senate, to call on J.P. Morgan Chief Executive Jamie Dimon to resign from the board of the New York Federal Reserve.
The S&P 500 Index (US:SPX) slid 19.64 points, or 1.5%, to 1,338.35, its lowest close since Feb. 2. Financials led the slide among its 10 sectors, all of which ended lower.
With the S&P 500 starting off the day about 5% from recent highs, not much “damage” has been done, according to Dan Greenhaus, chief global strategist at BTIG LLC. Declines of 7% are perfectly normal, and would not be all that worrisome, he said.
In executive shake-ups, electronics retailer Best Buy Co. (US:BBY) said founder Richard Schulze would step down as chairman following a board probe that concluded he failed to report allegations of personal misconduct by former chief Brian Dunn to its audit committee. Shares rose 1.5%.
Scott Thompson on Sunday stepped down as Yahoo Inc.’s (US:YHOO) chief executive, with the resignation coming 10 days after hedge-fund activist Daniel Loeb accused him of faking a computer-science degree. Ross Levinsohn has been named interim chief. Shares rose 2%.
Shares of Groupon Inc. (US:GRPN) rallied more than 18% ahead of first-quarter results after the close from the daily-deal company.
The Nasdaq Composite Index (US:COMP) declined 31.24 points, or 1.1%, to 2,902.58, its lowest close since Feb. 6.
For every stock rising five fell on the New York Stock Exchange, where 803 million shares traded. NYSE composite volume topped 3.6 billion.