NEW YORK — Not even a string of better earnings reports could stave off worries about debt on Monday.
Europe's banking troubles and an impasse over lifting the U.S. government's borrowing limit helped drag down stock markets in the U.S. and Europe. Gold rose above $1,600 an ounce as investors sought safe places to park money.
The S&P 500 index dropped 10.70 points, or 0.8 percent, to close at 1,305.44.
The Dow Jones industrial average and Nasdaq composite index gave up their gains for the month. The Dow fell 94.57 points, 0.8 percent, to 12,385.16. The Nasdaq fell 24.69 points, or 0.9 percent, to 2,765.11.
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The results of stress tests on European banks released last week came under deeper scrutiny. Eight banks failed the test aimed at measuring how well they would hold up under additional financial strain.
But the tests didn't take into account how banks would fare if Greece or Italy defaults, says Dan Greenhaus, chief global strategist at BTIG.
In the U.S., the debt limit debate remains at a standstill in Washington. The Treasury Department says the limit must be raised by Aug. 2 or the government risks defaulting on its debt.