Stocks Decline Before Close, Led by Tech
Stocks pared losses but remained significantly lower on worries over euro zone debt troubles, and signs of a slowing economy in Europe and Asia.

The Dow Jones Industrial Average fell more than 120 points after ending a volatile week loweron Friday.

Most blue-chip components sank, led by Caterpillar and DuPont.

TheS&P 500 fell nearly 1 percent, while the tech-heavy Nasdaq sank about 1.25 percent. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 17.

All key S&P 500 sectors fell, led by technology, energy and industrials.

The selloff on Monday was triggered by worries kindled over the weeked that euro zone debt troubles are getting worse. But investors in the U.S. are focused on the rise in the dollar and the slide in commodities, ranging from crude oil and precious metals to industrial commodities like cotton, lumber and copper, said James Paulsen, chief investment strategist at Wells Capital Management.

"For stocks to find a bottom will be when commodities level out," Paulsen said.

Paulsen has his eye mainly on industrial commodities, and says if "they find a bottom, then you'll see the stock market find a bid again." For that to happen, he added, economic reports in the U.S. will need to turn brighter. The fact initial jobless claims came down last week was one good soon, that will need to be repeated this week.

But if the economic reports continue to be bad, then "we’ll be down below 1300," he said.

Monday's market action pushed stocks through some key technical levels. The S&P 500, for instance, traded below 1,320, which was the low on the index last week, noted Andrew Burkly, director of equity strategy research at Brown Brothers Harriman.

"The next significant support level is 1295, that would be the next battle ground," Burkly said. He added that he expects the market to fall through that level to 1,230, his low estimate for the year. For the rest of 2011, Burkly expects the market to remain choppy, and the S&P 500 not to get much higher than 1,350.

But some analysts are more optimistic.

"My gut basically says that for right now, it's too early to push the panic button," said Sam Stovall, chief investment strategist at Standard & Poor's.

"It's like listening to a pilot say, 'We're approaching turbulence, please put on your safety belt,' Stovall said. "She is not saying, 'Don your parachutes and assemble by the door.'"

Much of Monday's market weakness stemmed from troubles in Europe, which began over the weekend with Standard & Poor’s downgrade of Italy's outlook to "negative" from "stable." Then Spain's ruling Socialist party suffered an election setback.

On Monday, European purchasing managers index dataindicated a slowdown in growth in the euro zone, with German and French numbers below expectations. Also, Fitch lowered Belgium's rating outlook to "negative" from "stable."

Also in Europe, several leaders called for Greece to avoid debt restructuring and push ahead with austerity measures.

In China, an index of manufacturing growth fell in May, an indication of a sluggish economy.

The news of slowing global growth sent oil prices lower. U.S. light, sweet crude fell 2.40 percent to $97.70 a barrel. In London, Brentcrude fell 2.04 percent to $110.10.

The euro zone troubles also

against the dollar. The

index rose more than 1 percent against a basket of currencies. Meanwhile,

0.4 percent to close at $1,515.30 an ounce, gaining support as a safe alternative, while silver fell 0.5 percent to $34.90.