(By Balachander) U.S. stocks tumbled as sharp rise in Spain's borrowing costs and political uncertainty in Greece worsened fears of a deepening eurozone debt crisis. A disappointing report on domestic home sales also contributed to the negative sentiment.
S&P 500 Index lost 1.43 percent to finish at 1,313.32. The Dow Jones Industrial Average tumbled 1.28 percent to end at 12,419.86. The Nasdaq Composite Index shed 1.17 percent to close at 2,837.36.
On the US economic front, a report from the National Association of Realtors (NAR) showed that pending home sales unexpectedly dropped 5.5 percent last month to a four-month low after three consecutive monthly increases, while economists sales to edge slightly higher.
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On the European front, yields on 10-year Spanish government bonds jumped to 6.66 percent amid heightened concerns over the country's banking sector. Italian 10-year yields breached the 6 percent danger level for the first time since January.
A report from the European Commission showed that euro-zone economic sentiment declined to 90.6 this month its lowest level in nearly three years from 92.9 in April.
Meanwhile, results of a new poll showed the anti-austerity parties gained ground ahead of next month's elections in Greece.
The benchmark 10-year U.S. Treasury yields slid to their lowest in at least 60 years at 1.6288 percent on European worries.
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In corporate news, Research In Motion Ltd. (NASDAQ:RIMM) retreated 7.83 percent after the BlackBerry maker forecast an operating loss for its first quarter amid lower volumes and a highly competitive pricing dynamics in the marketplace. The company reiterated that its financial performance will continue to be challenging for the next few quarters.
Pep Boys - Manny, Moe & Jack (NYSE:PBY) plunged 19.93 percent after the auto parts retailer agreed to terminate its proposed $1 billion merger with private-equity firm Gores Group LLC. Los Angeles-based Gores had offered $15 a share for Pep Boys in January.
Monsanto Co. (NYSE:MON) gained 2.22 percent after the seed-and-traits company raised its earnings outlook for 2012 citing continued strong third-quarter sales across its chemistry portfolio including its Roundup, selective herbicides and lawn-and-garden businesses. The St. Louis, Missouri-based company now expects ongoing earnings per share in the range of $3.65 to $3.70 from prior expectations of $3.49 to $3.54.
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