NEW YORK (AP) - Stocks slumped on Wall Street Monday ahead of the beginning of the U.S. corporate earnings season and as more signs of instability emerged in Europe.
The Dow Jones industrial average slid 74 points to 12,698 shortly after noon. The Dow was headed for its third straight losing day.
Alcoa, one of the 30 stocks in the Dow, becomes the first major U.S. company to report second-quarter results after the market close Monday. Even before the results came out, investors were going negative on the stock, sending it down 7 cents to $8.65.
Alcoa's results are often seen as a harbinger of how other major U.S. companies will fare, and so far investors' expectations are low. Wall Street analysts are forecasting a 1 percent decline in second-quarter earnings of S&P 500 companies, according to Standard & Poor's Capital IQ.
Kim Caughey-Forrest, senior equity analyst at Fort Pitt Capital Group, says many portfolio managers are afraid that this earnings season could bring bad surprises about stocks they've picked up recently.
"It's report card time," Caughey-Forrest said.
If earnings decline at S&P 500 companies overall in the second quarter, it would be the first drop after an unbroken string of growth since the third quarter of 2009, according to Sam Stovall, chief equity strategist at S&P Capital IQ. Of the 103 companies that have provided earnings guidance in the past month, 63 were negative, Stovall told clients in a research note.
Investors were also spooked by news from Europe, where Spain's borrowing costs were rising dangerously high, just as finance ministers from the Euro zone countries gathered in Brussels to finalize the details of a rescue package for Spain's banks.
The interest rate on Spain's 10-year government bond rose to 7 percent Monday. Greece, Ireland and Portugal all asked for help from their international lenders when their own borrowing costs rose that high.
In Greece, a new three-party coalition government won a vote of confidence in parliament early Monday, ending a period of uncertainty that led to two elections in less than two months. Greece is in its fifth year of recession and has survived for two years on international rescue loans.
Spain is in better shape financially, and can afford the high rates for a few weeks at least. However, a long-term solution is badly needed to prevent the nation, which has an unemployment rate near 25 percent, from defaulting.
In other trading, the Standard & Poor's 500 index fell six points to 1,348 and the Nasdaq fell 15 points to 2,922.
Other stocks that were making big moves on Monday:
- Amerigroup. The Medicaid service provider's stock soared $24.40, or 38 percent, to $88.84 on news that it is being bought by health insurer WellPoint for $4.5 billion in cash.
- Wellpoint. The health insurer's stock rose $2.09, or 3.5 percent, to $62. The deal more than doubles Wellpoint's market share in Medicaid, the federally funded program that is poised for expansion.
- Visa and MasterCard. The two largest charge card processors stocks fell after an analyst recommended investors sell those stocks because of the global economic slowdown. MasterCard fell $15.60, or 3.5 percent, to $426, while Visa fell $2.95, or 2.3 percent, to $122.33.