NEW YORK -- U.S. and European stocks fell Monday after weak Chinese and Japanese data stoked worries about slowing global economic growth, while oil prices sank to five-year lows on expectations of oversupply into 2015.
The euro sagged to 2½-year lows against the dollar after European Central Bank policymaker Ewald Nowotny warned of a "massive weakening" of the eurozone economy and said the purchase of state bonds could provide a boost. His comments came just days after Standard and Poor's downgraded its credit rating on Italy, the bloc's third-largest economy, to a level just above junk status.
Nowotny's remarks raised bets in the bond market for a fresh round of ECB stimulus in the first quarter of 2015.
Data out of Asia and the sell-off in oil took a toll on sentiment.
In energy markets, Brent crude settled down $2.88 or 4.17 percent at $66.19 a barrel, a five-year low, on predictions that oversupply would keep building until next year after OPEC decided not to cut output. U.S. crude futures settled down $2.79 a barrel, or 4.24 percent, at $63.05.
Japan reported its third-quarter economic contraction was deeper than previously thought, while China's unexpectedly weak import data signaled slowing demand in the world's second- biggest economy.
The disappointing economic developments abroad overshadowed Friday's robust U.S. jobs report, which revived bets the Federal Reserve might consider ending its near-zero interest rate policy in mid-2015.
"I think people are looking at the potential ripple effects from the slide in oil. You're seeing some of these ripple effects today," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles, noting there also seems to be profit-taking as year's end draws near.
The Dow Jones industrial average (^DJI) closed down 106.31 points, or 0.59 percent, at 17,852.48, the Standard & Poor's 500 index (^GPSC) ended 15.06 points, or 0.73 percent, lower at 2,060.31 and the Nasdaq composite (^IXIC) finished down 40.06 points, or 0.84 percent, at 4,740.69.
In the currency market, the euro fell to a more than 2½-year low against the greenback at $1.2247 before rebounding to $1.2309 in U.S. trading, up 0.2 percent from Friday.
The dollar also retreated against the yen and other major currencies as traders booked some profits on the U.S. currency's recent gains linked to expectations the Federal Reserve might raise interest rates sooner in 2015 than had been expected.
The dollar was down 0.6 percent at 120.71 yen after striking a seven-year peak of 121.84 yen in Asian trading.
Bets on a fresh round of ECB stimulus in the first quarter of 2015 helped boost prices of U.S. and German government bonds. Benchmark 10-year U.S. yields fell to 2.26 percent and 10-year Bund yields declined to 0.72 percent.
Spot gold prices edged up 1 percent at $1,204.50 an ounce on some safe-haven demand on the modest losses in U.S. and European equity prices.
-With additional reporting by Chuck Mikolajczak and Caroline Valetkevitch in New York; John Geddie and Patrick Graham in London; Blaise Robinson in Paris; and the China economics team.
What to Watch Tuesday:
- At 10 a.m. Eastern time, the Labor Department releases the Job Openings and Labor Turnover Survey for October, and the Commerce Department releases wholesale inventories for October.
- AutoZone (AZO)
- Burlington Stores (BURL)
- Conn's (CONN)
- Korn/Ferry International (KFY)
- Krispy Kreme Doughnuts (KKD)