Europe’s woes kicked off a gloomy Monday for U.S. markets.
By midafternoon, both the Dow Jones industrial average and Standard & Poor’s 500-stock index had fallen by more than 1 percent, while the Nasdaq tech index had dropped by close to 2 percent.
The markets woke up to three blows from Europe: Spain’s formal request for a $125 billion bailout package from the euro zone, the resignation of Greece’s brand-new finance minister Vassilis Rapanos for health reasons and island nation Cyprus’s announcement that it could be the next on the continent in line for a bailout.
European markets had already tanked at the end of the day. Both the Stoxx 50 index and the German DAX dropped by more than 2 percent.
Last week, domestic markets slid sharply as concerns of a global economic slowdown heightened and faith in Europe’s ability to solve its crisis grew weaker. And in the United States, several major banks were downgraded by Moody’s ratings agency.
A European Union summit is scheduled later this week in which major leaders said they would discuss a new stimulus package worth $163 billion for the euro zone.
Spain’s economy minister, Luis de Guindos, requested up to $125 million from euro group chairman Jean-Claude Juncker to save the country’s banks. But he said that the details and conditions of the loan would be set at a later date.
The government of Cyprus, Greece’s euro-zone neighbor, issued a statement Monday requesting assistance for its failing banks from the European Financial Stability Facility, without specifying an amount. The statement said the aid was needed “to reduce the risks faced by the Cypriot economy, particularly the negative impact from the banking sector due to high exposure in the Greek economy.”
Greek finance minister Rapanos was barely a week into his term after the election of a new coalition government last Wednesday. His resignation was accepted by new Prime Minister Antonis Samaras.