U.S. equities fell sharply overnight, as investors were worried over potential political shakeups in Europe, and new signs of an economic slowdown in China.
By the close the Dow Jones had lost 102 points to 12,927, with the NASDAQ sinking 30 points to 2970.
In Europe, French president Nicolas Sarkozy finished in second place in the initial round of the country's presidential elections Sunday. Sarkozy, one of the key players behind the European deal to avoid a sovereign debt default, will face Socialist candidate Francois Hollande, who has been openly averse to EU austerity measures, in a run off vote in early May.
Meanwhile, a Dutch shakeup is also looming, with the current Prime Minister Mark Rutte expected to resign after one of his coalition partners withdrew on negotiations over the 2013 budget, prompting new elections in the Netherlands and putting the country's credit rating at risk.
Managing director of the IMF, Christine Lagarde, also warned over the weekend at meetings with the World Bank that the "dark clouds" on the horizon for the globaly economy threatened the light recovery.
Adding to this, eurozone manufacturing also fell unexpectedly Monday to the lowest level since November.
And in China, a preliminary reading on manufacturing showed a contraction for the second straight month.
In corporate news, Xerox Corp.'s (NYSE:XRX) first-quarter profit attributable to the company fell to $269 million from $281 million last year, with quarterly earnings per share remaining flat at $0.19.
On an adjusted basis, profit was $319 million, compared to $334 million a year earlier, while adjusted earnings remained unchanged at $0.23 per share, meeting expectations.
Total revenues for the quarter were $5.5 billion, up one percent from a year earlier, and up 2 percent in constant currency. According to Thomson Reuters, analysts estimated revenues of $5.45 billion for the quarter.
Toy maker Hasbro (NASDAQ:HAS) posted a first-quarter loss on Monday due to steep severance costs as revenue declined, missing Street estimates.
Excluding severance costs, earnings were 4 cents per share, missing the 8 cents per share expected by analysts.
ConocoPhillips (NYSE:COP) said Monday first-quarter profit fell three percent from a year earlier, missing analysts' expectations, as lower production and weaker refining margins more than offset higher crude prices.
Kellogg Co. (NYSE:K) Monday trimmed its full-year forecast due to weaker-than-expected first quarter performance and weak volume growth in some U.S. categories.
The company now expects full-year earnings to be in the range of $3.18 to $3.30 per share. This compares with its prior guidance of $3.25 to $3.37 per share.
Netflix (NASDAQ:NFLX) is scheduled to release quarterly results after markets close. Analysts expect the company to post a loss of 27 cents per share.
On the deals front, Pfizer (NYSE:PFE) said early Monday that it has agreed to sell its baby formula business to Nestlé (NSRGF) for $11.85 billion in cash.
AstraZeneca (NYSE:AZN) also announced it is buying California-based biotech business Ardea Biosciences (NASDAQ:RDEA) for $32 a share or $1.3 billion -- a 54% premium to Friday's closing price.
In other US news, in the the New York Times over the weekend, Wal-Mart (NYSE:WMT) was hit with allegations that executives in its Mexican division attempted to conceal a widespread bribery scheme from headquarters. Shares tumbled more than 4.9%.
And on Monday afternoon, Facebook announced that it would spend $550 million to buy part of Microsoft's (NASDAQ:MSFT) patent portfolio that it acquired from AOL (NYSE:AOL) two weeks ago for $1 billion. Microsoft shares were down around 0.83%.
Crude oil for June delivery dropped 77 cents, or 0.7%, to $103.11 a barrel on the New York Mercantile Exchange, while gold for June delivery fell $10.20, or 0.6%, to $1,632.60 an ounce - the lowest close in more than two weeks.
European stocks ended sharply lower on Monday. Britain's FTSE 100 shed 1.85%, while the DAX in Germany plunged 3.4% and France's CAC 40 dropped 2.8%.