NEW YORK (CNN/Money) -
Stocks tumbled in a global sell-off Monday that followed the assassination of the head of the U.S.-appointed governing council in Iraq, political unrest in India and another rise in oil prices.
The sell-off in stocks started in Asia, spread to Europe and continued on Wall Street. Treasury bond prices rallied as investors sought safe places to park their funds.
By the session's end, the Dow Jones industrial average (down 105.96 to 9906.91, Charts) had lost about 1.1 percent, with the broader Standard & Poor's 500 (down 11.60 to 1084.10, Charts) index off by a similar magnitude.
The Nasdaq composite (down 27.61 to 1876.64, Charts) sank 1.45 percent.
Stocks tried to recover at mid-session but were hit by another round of afternoon selling.
Stocks have stumbled for weeks on worries about rising interest rates, higher oil prices and the events in Iraq and elsewhere in the Middle East. While interest rate concerns faded somewhat Monday, oil and global safety issues moved to the forefront.
"One of the three things worrying the markets for weeks -- namely, interest rates -- has diminished, today," said Peter Cardillo, chief market analyst at S.W. Bach & Co. "But the geopolitical incidents and higher oil prices -- which are connected -- have sent a chill through global markets, creating this buyer's strike, and we're following suit."
Markets in the U.S. and beyond were shaken following a suicide bombing in Baghdad that killed the head of the Iraqi Governing Council, as well as a number of other Iraqis. The attack occurred not far from the American-led Coalition Provisional Authority headquarters.
Political turmoil in India following the surprise election victory last week of Sonia Gandhi's Congress party added to the unease by causing a stock market meltdown in that country.
The unrest contributed to the rising price of oil.
U.S. light crude oil futures hit an all-time high in response to concerns that supplies will be jeopardized by potential attacks in the Middle East. Light sweet crude for July delivery rose 18 cents to settle at $41.48 a barrel in New York.
"At these levels, the inflationary impact is not that great," Cardillo added. "But it could rise."
Tuesday brings earnings from Home Depot (HD: Research, Estimates) before the start of trading and Hewlett-Packard (HPQ: Research, Estimates) and Applied Materials (AMAT: Research, Estimates) after the close. Economic reports are also due Tuesday on housing starts and building permits in April.
(For a look at these and other key earnings and economic news due this week, click here.)
After so much selling, there is the potential for markets to see a little bounce here and there in the week ahead, said Mark Bryant, senior vice president at Brean, Murray & Co.
But in general, "the sentiment is very negative right now," Bryant said. "There's just very little reason to put money to work. It's also historically a tough time for stocks, through October."
What moved?
The selling was broad-based, with 28 out of 30 Dow issues declining. Interest-rate sensitive stocks such as Caterpillar (CAT: down $2.15 to $73.54, Research, Estimates), Alcoa (AA: down $1.08 to $28.70, Research, Estimates), Honeywell (HON: down $0.88 to $32.60, Research, Estimates) and General Motors (GM: down $0.95 to $43.40, Research, Estimates) were particularly weak.
Shares of Lucent Technologies (LU: down $0.18 to $3.10, Research, Estimates) tumbled 5.5 percent after the SEC slapped the company with a $25 million fine and charged former executives for their roles in accounting problems at the maker of telecom gear.
Nortel Networks (NT: down $0.31 to $3.26, Research, Estimates) tumbled 8.7 percent after a Wall Street Journal article said that the company gave a number of top executives cash bonuses, instead of the usual stock bonuses, days before the company warned that results would have to be restated for a second time because of financial irregularities.
On the Nasdaq, 9 of the 10 most heavily-weighted issues declined, with No. 1 most-actively traded Cisco Systems (CSCO: down $0.31 to $20.93, Research, Estimates) down around 1.5 percent.
Oracle (ORCL: down $0.24 to $11.36, Research, Estimates) lost more than 2 percent after it said late Friday that it was cutting the price of its hostile takeover bid for PeopleSoft by 19 percent because of recent market conditions. PeopleSoft (PSFT: Research, Estimates) sank 4.5 percent.
Stocks mostly shrugged off positive economic and earnings news.
The May New York Empire State index fell to 30.2 from a downwardly revised 34.1 in April. This was lower than expectations of 34 but still some showed strength in manufacturing recovery in the state.
Home improvement retailer Lowe's (LOW: down $0.90 to $49.68, Research, Estimates) reported a solid quarter, with earnings growing from a year earlier and topping estimates. Its stock, however, shed 1.8 percent.
Market breadth was negative. On the New York Stock Exchange, decliners outnumbered advancers by more than two to one as some 1.43 billion shares traded. On the Nasdaq, losers beat winners by three to one as 1.53 billion shares changed hands.
Among commodities markets, COMEX gold rallied $2.50 to settle at $379.60 an ounce.
Treasury prices rallied, with the 10-year-note adding 21/32 of a point in price, pushing its yield down to 4.69 percent from 4.77 percent late Friday.
The dollar fell versus the euro and yen.
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