Dow Plunges More Than 2% as Oil Prices Fall

Wall Street's return to the black was short-lived.

Stocks began the week sharply lower Monday, as traders eased away from equities on lower energy prices and a disappointing manufacturing report. The Dow Jones Industrial Average gave up 187 points, or more than 2%, at 8612. The Nasdaq dropped 42 to 1816, and the S&P 500 gave up 22 at 923.

Energy and materials stocks led the decline, as commodities prices fell. On the Nymex, oil prices pulled back as the dollar gained ground. Crude decreased $1.57 at $70.47 a barrel.

The major indexes are at a crossroads after a three-month rally. Although the Dow finished last week positive on the year, traders have begun to question whether the recovery has another hiccup or two left before returning to stabile growth.

The latest reading of the Empire State Manufacturing Index offered little hope. Economists had projected a flat reading, but the index dipped slightly this month.

The head of the International Monetary Fund said Monday that he believes the global economy may have further to fall, Reuters reported.

"Their (G8) stance is that we are beginning to see some green shoots but nevertheless we have to be cautious," IMF chief Dominique Strauss-Kahn said during a visit to Kazakhstan. "The large part of the worst is not yet behind us."

Emerging markets stand to contribute heavily to growth as the global economy rights itself, diplomats said at the first ever BRIC summit in Moscow. The BRIC nations include Brazil, Russia, India and China.

Meanwhile, Detroit, a city that could use all the help it can get, hosted the National Summit -- a meeting of 90 leaders in government and the private sector that is expected to draw a crowd of almost 3,000. The main topic will be the same economic conditions that forced the meeting out of Ford (F) Field and into the Detroit Marriott Renaissance Center.

In Washington, the Obama administration released an outline of its proposed regulatory overhaul of the financial industry. The proposal calls for higher capital and liquidity requirements, greater transparency and more consumer protection. Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers unveiled the outline in an opinion piece published Monday in The Washington Post. The full details of the plan are scheduled to be released Wednesday. In addition, President Obama gave a speech to the American Medical Association on his public health insurance plan proposal. 

The National Association of Home Builders said sentiment among its members who build single-family homes remained cautious about the future. Its housing market index declined slightly in June, the first downward move since January. There were some positives, the association said, like a first-time buyer tax credit that moved some houses. But builders face headlines as that tax credit expires later this year. 

World markets were mostly lower. In Asia, Japan's Nikkei dropped 1.0%, while Hong Kong's Hang Seng gave back 2.1%. In Europe, the U.K.'s FTSE fell 2.6%.

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