U.S. stocks fall after Greek "no" vote

Last Updated Jul 6, 2015 4:38 PM EDT

U.S. stocks closed lower on Monday as investors sought to digest this weekend's dramatic developments in Greece. After opening sharply lower, shares recovered somewhat in midday and late trading.

The Dow industrials ended down 46 points, or 0.26 percent, to 17,684. The S&P 500 lost 8 points, or 0.37 percent, to 2,069. And the Nasdaq fell 17 points, or 0.34 percent, to 4,992.

Signaling the widespread public opposition to foreign pressure, Greeks on Sunday voted against further "austerity" cuts in return for a bailout package -- conditions that had been demanded by the country's creditors in the past. For investors, the most pressing question is how European leaders react to the results of the national referendum.

German Chancellor Angela Merkel met with French President Francois Hollande in Paris today ahead of a full meeting of eurozone officials on Tuesday. Hollande told the press that "the door is open to discussions."

Overseas financial markets retreated. Germany's DAX fell 1.4 percent to 10,908 while the CAC-40 in France fell 1.6 percent to 4,730. The FTSE 100 index of leading British shares was 0.5 percent lower at 6,553.

Market watchers held out hope that a political solution remained on the table, but warned of volatility in the days ahead in saying that the risk of Greece exiting the 19-member currency block had risen sharply.

"The risk of a Grexit will highly depend on what happens over the next 24-48 hours between European leaders and the Greek government," analysts with TD Securities said in a note. "There could be a last-ditch effort to try to pull off a deal in the coming days, but the chances of a deal happening this week should still be viewed as very low."

In the short-term, perhaps the biggest issue facing Greece is whether the European Central Bank will continue funding its banks, which have been shut since last Monday. With the country's financial institutions low on euros and Greeks limited to small bank withdrawals, a move to cut off that lifeline could force banks to temporarily resort to a parallel currency.

Still, investors have displayed little anxiety throughout Greece's tortuous debt talks, having long ago reduced their exposure to the region and reasoning that Greece's small economy poses little risk to global financial stability.

Some are still betting that, despite the referendum, eurozone and Greek officials will find a solution to the logjam. That view was buttressed after Monday Greek Prime Minister Alexis Tsipras reiterated that his country wants to stay in the eurozone.

"I am fully aware that the mandate you've given me is not to break with Europe, but rather to strengthen our bargaining power to achieve a sustainable agreement," he said in a statement. "With social justice, with prospects for our future and an end to the vicious cycle of austerity."

In a reshuffle of his cabinet, Tsipras also accepted the resignation of Finance Minister Yanis Varoufakis, one of his government's loudest voices against austerity. Analysts said the move could signal a more conciliatory stance by Tsipras ahead of talks with eurozone members this week.

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    Alain Sherter covers business and economic affairs for CBSNews.com.