U.S. stocks suffered their biggest setback in more than two months on Monday, sending major indexes below thresholds that had been celebrated during last Friday's rally.
The S&P 500 closed at 1495.71, down 17.46 points or 1.2 per cent, for its worst decline since mid-November. The blue-chip Dow Jones industrial average closed at 13,880.08, down 129.71 points or 0.9 per cent. The decline marked the Dow's first triple-digit decline of 2013.
In Canada, the S&P/TSX composite index closed at 12,717.62, down 51.21 points or 0.4 per cent.
The declines follow what had been a remarkably smooth – and upward – start to the year, putting the S&P 500 above 1500 and the Dow above 14,000. The recent gains had also put new record highs within earshot.
Part of the problem on Monday stemmed from Europe, where political uncertainty in Spain stirred dormant concerns about the debt crisis there. Spain's prime minister faced calls to resign after reports of illegal political payments, sending government bond yields higher. The yield on the 10-year bond rose 23 basis points.
Closer to home, U.S. factory orders rose 1.8 per cent in December, below expectations among economists for a rise of 2.2 per cent.
Debt rating agencies tanked in afternoon trading after the U.S. Justice Department said it planned to file a civil lawsuit against Standard & Poor's, in connection to its ratings on collateralized debt obligations prior to the financial crisis. McGraw-Hill Cos., which owns S&P, fell 13.8 per cent. Moody's Corp. fell 10.7 per cent.
Research In Motion Ltd. stood out from the carnage, rising 15.2 per cent, marking a rebound from its selloff last week after unveiling its new BlackBerry 10 last week. Bernstein upgraded the stock today to "outperform" from "market perform" and raised its price target to $22 from $12. There are also reports citing channel checks that suggest its BlackBerry 10 sales are off to a strong start in the U.K.
Key commodities were mixed. Gold rose to $1,676.40 (U.S.) an ounce, up $5.80. Crude oil fell $96.17 a barrel, down $1.60.
Suncor Energy Inc. fell 0.8 per cent and Barrick Gold Corp. rose 0.7 per cent.