An early rally fueled by Spain's banking bailout fizzled Monday and US stocks headed into negative territory, as the reality of more imminent risks confronting the eurozone sank in.
At the close the Dow Jones Industrial Average was down 142.97 points (1.14 percent) to 12,411.23, after an opening spurt took it up some 81 points.
The broad-market S&P 500 fell 16.73 (1.26 percent) to 1,308.93, while the tech-rich Nasdaq Composite lost 48.69 (1.70 percent) to 2,809.73.
Traders also appeared to be taking profits after US equity markets scored their best week of the year last week.
The $100 billion euro ($125 billion) Spain banking rescue on the weekend was a positive, but analysts said Spain still faces tough fiscal challenges and Greece's coming election still risks putting a huge crack in the eurozone.
"Although news that Spain has requested money to shore up its banking system has been regarded as a positive development... there are still concerns about the precarious conditions -- fiscal, financial, and economic -- that exist in other corners of Europe," said Briefing.com.
Banks suffered in the day's fall: Bank of America dropped 3.7 percent, Citigroup 4.7 percent, JPMorgan Chase 2.6 percent, and Wells Fargo 1.4 percent.
Apple unveiled its new operating system for the iPhone and iPad, called iOS 6, but that did not spark investors, who sold down the stock to the tune of 1.6 percent.
Microsoft shed 2.6 percent and Google lost 2.0 percent.
Progress Energy shares rose 2.5 percent after federal regulators approved its merger with Duke Energy, while Duke lost 0.8 percent.
BP's US-traded shares were 0.5 percent higher on reports it could soon strike a deal with US regulators to settle pollution charges arising from the devastating 2010 Gulf of Mexico oil spill for $15-$25 billion.
Bonds rallied. The yield on the 10-year Treasury bond fell to 1.60 percent from 1.64 percent Friday, while the 30-year bond slid to 2.72 percent from 2.76 percent.
Bond prices and yields move in opposite directions.