NEW YORK - Renewed concerns about Europe's debt dragged stocks lower for a second straight day.
European finance ministers approved $110 billion in rescue loans to Portugal on Monday, but have yet to decide on a second rescue package for Greece.
The arrest of the head of the International Monetary Fund is expected to make solving Greece's problems more difficult. The official, Dominique Strauss-Kahn, had been heavily involved in trying to fix the debt crises in Portugal and Greece. He is being held without bail on charges of sexually assaulting a hotel employee in New York City.
Investors are growing increasingly concerned over the prospect of an unprecedented U.S. default on its debt. Treasury Secretary Timothy Geithner told congressional lawmakers in a letter Monday that the agency is taking steps to postpone a default.
"The main thing hanging over most financial markets right now is what's going to happen with the debt ceiling and government borrowing and spending," said Tim Courtney, the chief investment officer at Burns Advisory Group in Oklahoma City.
The Dow Jones Industrial Average lost 47.38 points, or 0.4 percent, to close at 12,548.37. The Standard & Poor's 500 index fell 8.30 points, or 0.6 percent, to 1,329.47. The Nasdaq fell 46.16 points, or 1.6 percent, to 2,782.31.
Commodity prices were mostly lower. Oil prices fell $2.28 to settle at $97.37 a barrel Monday as worries eased that Mississippi River flooding could disrupt refineries and slow demand.