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NEW YORK (
TheStreet) -- Even as earnings season continues to accelerate in the coming week, events across the pond in Europe could take precedence.
Richard Weeks, a managing director at HighTower's VWG Wealth Management, said the action in U.S. Treasuries is telegraphing increased trepidation about the eurozone's stability.
"Often the bond markets tell us certain things in advance of other markets," said Weeks. "There are some alarming signs in the bond market. The 10-year Treasury has fallen below 1.5%. That doesn't sound like what I would call risk-on. And the Spanish-German spread on 10-years went to an all-time high today. The signs of stress have not abated."
He added, "At the end of June, the U.S. stock market looked like it was heading toward getting even uglier. Now things have been remarkably better since that period, and for whatever reason it might be time for the ever-changing psychology of the markets to reverse."
Borrowing costs soared for Spain on Friday as the country's Valencia region asked for a bailout and the Spanish government lowered its gross domestic product forecast for next year, saying it expects the country to remain in recession. The news knocked U.S. stocks for a loop on Friday, overshadowing some growing optimism about the early strength seen in second-quarter reporting season.
Brad Wheelock, financial advisor at RBC Wealth Management, said "Europe is a mess and no single brushstroke is going to complete that picture ... It is a bit of a challenge. The last stop is Italy. If you're asking hey, when can you really feel better? When there is a notion that Italy isn't one of the dominoes."
Dow Jones Industrial Average shed 121 points, or 0.93%, to close at 12,823. The move pushed the blue-chip index back into negative territory for the month. For the week, though, the Dow rose 0.36%, and the year-to-date gain sits at 4.95%.
S&P 500 fell 14 points, or 1.01%, to settle at 1363. The benchmark index tacked on 0.43% for the week, and it has now appreciated 8.35% in 2012.
Nasdaq sank 41 points, or 1.37%, to finish at 2925. It added 0.57% on the week and is up 12.29% year to date.