NEW YORK (TheStreet) -- Stocks slumped on Monday, following European markets to the downside in a selloff after Greek debt talks broke down. Health care stocks were the worst performers in a broad-based selloff.

The S&P 500 fell 0.77%, the Dow Jones Industrial Average dropped 0.87%, and the Nasdaq declined 1%.

Drugmakers Gilead Sciences (GILD), Merck (MRK), Pfizer (PFE) and Sanofi (SNY) were among the worst performers in the health care sector, while the Health Care SPDR ETF (XLV) dropped 0.8%. 

European markets were sharply lower after negotiations between Greece and its European creditors broke down on Sunday, reportedly after only 45 minutes. Both sides are standing firm on proposed austerity measures with no agreement in sight which would allow Greece access to additional debt relief before its repayments to the International Monetary Fund come due June 30.

"Some would claim that [Greece] has already technically defaulted on its debt by opting to bundle all of this month's 1.6B euros debt payments to the end of this month, but if no deal is reached by July, the prospect of a Grexit (Greek exit from the eurozone) could become the base case," said Matt Weller, senior technical analyst at Forex.com.

Greece has another chance to negotiate terms for further debt relief at a meeting of eurozone finance ministers on Thursday. 

Germany's DAX fell 1.9%, France's CAC 40 was down 1.4%, and the FTSE 100 in London slid 1.1%. The Athens Stock Exchange fell 5.2%.

Homebuilder confidence in the U.S. hit a nine-month high in June, according to the National Association of Home Builders' monthly Housing Market Index. The gauge gained 5 points to 59 in June, higher than an estimated reading of 55. 

U.S. industrial production fell 0.2% in May, below forecasts for an increase of 0.2%. The measure fell 0.5% in April.

"The tone of this report was quite disappointing, and when added to the weak Empire manufacturing sector print, the market is beginning to look warily to the other economic reports this week for some context in judging the disappointing manufacturing sector performance -- which appears to show no signs ending," said Millan Mulraine, deputy head of U.S. strategy at TD Securities.

The Empire State Manufacturing Survey, a gauge of activity in the New York region, declined to a reading of -2 in June, down from 3.09 in May. Economists had expected a reading of 5.9.

Standard Pacific (SPF) and Ryland Homes (RYL) shares were on watch after the homebuilders announced a merger with a combined market cap of $5.2 billion. Standard Pacific shareholders will hold a 59% stake while Ryland shareholders will hold the remainder.

Alibaba (BABA) announced plans to launch a streaming service similar to Netflix (NFLX) in China called Tmall Box Office. The service is expected to launch in two months and marks poor timing for Netflix which is reportedly exploring the possibility of launching in the region.

CVS Health (CVS) shares climbed after the company announced it will acquire Target's (TGT) pharmacy business for $1.9 billion. The deal sees CVS assuming ownership of 1,600 locations in 47 U.S. states.

"Here's a win for everyone," said TheStreet's Jim Cramer. "Plenty of new customers for CVS. Plenty of traffic and bucks up front for Target. Both stocks should run even with Greece gumming up the works!"

General Motors (GM) shares were slightly lower on reports the automaker will likely team up with Japan's Isuzu Motors to re-enter the medium-duty work truck market. Under the proposed deal, Isuzu will manufacture the vehicles while GM will distribute them through its dealer network, according to The Wall Street Journal.

The Federal Reserve will dominate the economic calendar this week with members convening for their two-day meeting on Tuesday. An announcement will be released and press conference held mid-afternoon Wednesday. Economists do not expect Fed members to elect to raise interest rates until September at the earliest.

"Activity is not yet strong enough to give the Fed "reasonable confidence" that progress in the labor market will continue," said SG Global Economics' Michala Marcussen. "Therefore, we do not expect any signals regarding the timing of the lift-off in rates."

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