Worries about China's economic growth were also in the mix after a member of the People's Bank of China reportedly forecast a slowdown in gross domestic product this quarter. Buyers did come into the market as the day waned, helping all three major U.S. equity indices recover from their worst levels of the day. The Dow Jones Industrial Average lost 101 points, or 0.79%, to closed at 12,721.46, bouncing nearly 140 points off a session low of 12,583. Within the Dow, 23 of the index's 30 components slumped, led by McDonald's ( MCD), Microsoft ( MSFT), Cisco ( CSCO) and Kraft Foods ( KFT). Shares of McDonald's fell 2.8% after the company missed on the top line in its latest quarter, citing a slowdown in the global economy and "persistent" economic headwinds. Cisco announced a restructuring late in Monday's session, saying it's eliminating 2% of its workforce, or 1300 jobs. The networking giant's stock gave back 1.8% on the day. Dow gainers included JPMorgan ( JPM), General Electric ( GE) and Caterpillar ( CAT). The S&P 500 dropped 12 points, or 0.89%, to settle at 1350.52. The session low was 1337. Every sector in the broad market declined with basic materials, energy, technology and transportation enduring the steepest selling. The Nasdaq dropped 35 points, or 1.20%, to close at 2890. The tech-heavy index ran as low as 2853 during the volatile trading day. Losers outpaced winners by a ratio of more than 3-to-1 on the New York Stock Exchange and 4-to-1 on the Nasdaq. The VIX, which measures market volatility through options action in the S&P 500, jumped more than 14% to 18.60. A level of 20 is indicative of elevated fear in the market. On Monday, Spanish bonds yields surged to their highest levels since the creation of the euro even after the continent's finance ministers on Friday backed the details of an aid package worth up to €100 billion for Madrid to bolster its troubled banks. The Spanish 10-year yield managed to surge to more than 7.4%. "The markets are being driven by the Spanish yields being driven to the high sevens, and now the markets went from an expectation of a bailout of Spanish banks to a sovereign bailout of Spain," said John Burke, president of Burke Financial Strategies. "The problem is Spain is not like the United States. They can actually run out of money. They don't print their own money. If they run out of money they need a bailout. Spain's very a very big economy relative to say Greece or Ireland; countries that have already been bailed out. This is a big deal."
NEW YORK ( TheStreet) -- U.S. stocks finished with deep losses Monday as questions about Greece's ability to live up to austerity measures and soaring Spanish bond yields reignited investor frustration about the pace of progress in the eurozone.