U.S. stocks traded lower on Monday, following a decline in global markets, as the Greece debt crisis escalated over the weekend. (Tweet This)
The Dow Jones industrial average quickly fell more than 150 points in the market open, with JPMorgan Chase leading all blue chips lower. The Nasdaq Composite recovered slightly after plunging more than 1 percent in opening trade, with biotechs and Apple both sharply lower.
The S&P 500 traded about 0.80 percent lower with only utilities advancing.
“You’ve got a lot of influences coming in, some expected and some unexpected. In the aggregate that’s going to keep alt of pressure on markets both internationally and domestically,” said Art Hogan, chief market strategist at Wunderlich Securities.
In addition to capital controls in Greece, Puerto Rico’s governor said the commonwealth cannot pay its debt of about $72 billion. Mainland Chinese markets entered bear market territory, with the Shanghai Composite closing 3.3 percent lower on Monday despite initial attempts at gains following the central bank’s rate cut over the weekend.
Concerns over Greece hit global markets hard, with stocks in France and Germany down about 3 percent or more after earlier plunging more than 4 percent. Asian stocks also fell overnight, with Japan’s Nikkei off 2.9 percent.
“For the most part the United States and U.S. equities are pretty well insulated from the crisis in Greece,” said Jack Ablin, chief investment officer at BMO Private Bank. He said the issues in Europe are more political.
Following declines overseas, U.S. futures were sharply lower in morning trade, with the Dow futures down by about 180 points but off earlier lows of more than 220 points lower.
The dollar edged higher, while the euro traded near $1.11. Earlier, the euro fell below $1.10 to a one-month low.
Treasury yields recovered from an earlier decline, the U.S. 10-year yield near 2.39 percent, while the 2-year yield was 0.66 percent in morning trade. The German 10-year bund yield was 0.83 percent after trading near 0.81 percent earlier.
Read More Live blog on Greece
In what Ablin called an indication of “failing leadership,” Greek Prime Minister Alexis Tsipras called a referendum for July 5, in which Greeks will vote on whether to accept the austerity rescue package previously offered by Athens’ creditors.
Greece’s banks and main stock exchange are closed this week to prevent a run on financial institutions. The central bank has also recommended a 60 euro ($66) limit on withdrawals from cash machines.
The closures came after reforms-for-financial aid talks between Greece and its creditors broke down and the European Central Bank capped emergency funding to Greek banks on Sunday.
Without a deal, Greece is set to default on its 1.5-billion-euro ($1.66 billion) debt due to the International Monetary Fund Tuesday.
“One of the other issues exacerbating the issue particularly in Greece is liquidity. We’re going to see outsized movements in either direction. Liquidity is going to only get worse this week with Friday’s close,” Ablin said. “Until (nonfarm payrolls) we’re going to be mired in headlines.”
The only economic data out Monday is pending home sales at 10:00 a.m. ET. Investors will closely watch Thursday’s nonfarm payrolls report for further indications on the timing of a rate hike.
Markets are closed Friday in observance of the July 4 holiday.
Lance Roberts, general partner at STA Wealth Management, said investors should watch weekly gains and losses more than daily market moves.
“… Even if we break below 2,080 today, as long as we close above that level by the end of the week,then nothing has changed. A close below that level will suggest that we are beginning a more significant correction toward the January lows of 2000 to start with,” he said.
Gannett –The company splits in two, effective today. The existing parent company is renamed Tegna and will own 46 broadcast stations as well as the Cars.com and Careerbuilder.com websites. The newspaper operation, including USA Today, are spun out into a new company which will carry the Gannett name and ticker symbol.
—CNBC’s Peter Schacknow contributed to this report.
On tap this week:
10 a.m.: Pending home sales
Deadline for Iran nuclear talks
9 a.m.: S&P/Case-Shiller home prices
9:45 a.m.: Chicago PMI
10 a.m.: Consumer confidence
6 p.m.: St . Louis Fed President James Bullard
Vehicle sales released by manufacturers
8:15 a.m.: ADP employment
9:45 a.m.: Manufacturing PMI
10 a.m.: ISM manufacturing, construction spending
10:30 a.m.: Oil and gasoline inventories
8:30 a.m.: Initial claims, employment report
10 a.m.: Factory orders
10:30 a.m.: Natural gas inventories
Fourth of July holiday
Bond and stock market closed