After surge, stocks fall sharply on debt worries

Five years ago, two U.S. stock market indexes reached all-time highs before the economy crashed. Now, the Dow Jones is just 4 percent below its all-time high. Jill Schlesinger, editor-at-large for CBS, has tips on how to take advantage of the moment.

WASHINGTON U.S. fell sharply Monday in the first trading session after major indexes soared to post-financial crisis highs.

The Dow Jones industrial average lost 129 points to 13,880. The broader Standard & Poor's 500 index dropped 17 points to 1495 while the Nasdaq composite index fell almost 48 points to 3,131.

The declines followed a surge Friday that pushed the Dow over 14,000 for the first time since 2007, before the financial meltdown that routed world markets.

Analysts blamed the rocky session on everything from losses by the Euro to inevitable sell-offs that occur when the market goes so far so fast.

"It started to look like things in the market are maybe getting a little ahead of themselves, compared to some of the data we've seen," said Bill Stone, chief investment strategist at PNC Asset Management Group. He said problems in Europe are also beginning to affect U.S. markets after several quiet months.

Borrowing costs for Italy and Spain rose Monday, Stone noted, reflecting concerns among bond investors that those countries may be unable to meet their financial obligations.

"It kind of restarts some of the old worries that we've been able to ignore for quite some time," Stone said.

In New York, technology and consumer stocks led the declines. Merck & Co. was among the Dow's biggest losers, dropping 84 cents, or 2 percent, to $40.98. The pharmaceutical company said Friday that its earnings declined in the fourth quarter and 2013 might be weaker than analysts had hoped.

Cisco Systems and Boeing were the only stocks among the 30 in the Dow that rose.

Corporate earnings reports continue this week. Health insurer Humana leapt $3.60, or 5 percent, to $78.95 after its results beat Wall Street's forecasts.

Cruise operator Royal Caribbean fell after reporting a quarterly loss related to its Spanish cruise line, Pullmantur. Prices and bookings have plunged since the Spanish government imposed strict austerity measures, limiting Spaniards' ability to spend. Royal Caribbean shares dropped $1.38, or 4 percent, to $35.41.

Media company Gannett Co Inc. fell $1.05, or 5 percent, to $18.79. Gannett's earnings beat Wall Street's expectations, but the company warned that its TV ad revenue will be hurt this quarter by the absence of $5.1 million in political spending and the move of the Super Bowl from NBC to CBS.

Among other companies making big moves was network gear maker Acme Packet Inc., which surged $5.30, or 22 percent, to $29.23 after Oracle said it would acquire the company for $2.1 billion.

In Europe, political jitters about Spain and Italy pushed stocks lower. Some indexes had their worst day in months.

Concerns over Europe's debt crisis have eased since last summer, in part because of efforts by the Spanish and Italian governments to get their finances under control.

An upcoming election in Italy places some of those reforms in doubt. The Spanish government, meanwhile, is embroiled in a corruption scandal that's raising questions over the future of Prime Minister Mariano Rajoy.

The euro was trading lower at $1.3531. The yield on the 10-year Treasury note fell to 1.97 percent from 2.05 percent earlier Monday as demand for ultra-safe assets increased.

Oil prices drifted lower. Crude fell $1.54 to $96.23 a barrel in New York.