U.S. stocks plunge on Greek comments; Dow Jones tumbles 2.14%

Investing.com - U.S. stocks were sharply lower on Tuesday, after Greece's Prime Minister announced a referendum on the recent bailout deal, sparking new concerns over the handling of the debt crisis in the euro zone.

During early U.S. trade, the Dow Jones Industrial Average tumbled 2.14%, the S&P 500 index dropped 2.40%, while the Nasdaq Composite index declined 2.09%.

Market sentiment was hit amid fears that Greece could move closer to a sovereign default, increasing the risk of contagion in global financial markets, if the vote on the bailout deal is rejected.

U.S. lenders posted sharp losses, tracking their European counterparts with shares in Citigroup tumbling 9.72% and JP Morgan plunging 7.71%, while Bank of America and Goldman Sachs plummeted 7.17% and 5.22% respectively.

Financial stocks were also rattled after brokerage MF Global filed for bankruptcy on Monday. MF Global sought bankruptcy protection within a week of Moody's decision to cut its rankings, after the firm reported a record quarterly loss.

On the upside, BankAtlantic saw shares skyrocket 143.56% after BB&T said it will acquire the Florida-based bank subsidiary with USD3.3 billion in deposits.

Energy stocks added to losses, after data showed that Chinese manufacturing activity dropped to its lowest level since February 2009. Oil and gas giants Chevron Corp and Exxon Mobil saw shares tumble 3.77% and 3.20%, while coal producer Alpha Natural Resources plunged 9.61%.

In earnings, drug maker Pfizer shares declined 3.28%, even after it reported higher-than-expected quarterly earnings and reaffirmed its 2012 targets.

Herbalife Ltd., the seller of nutritional and weight-loss supplements, sank 6.46% after announcing that its 2012 earnings would be no more than USD3.45 a share, below analysts' expectations.

Meanwhile, health insurance group Humana held on to Monday's gains, soaring 4.21% after posting a higher-than-expected profit and boosting its full-year earnings forecast.  

Across the Atlantic, European stock markets were sharply lower. The EURO STOXX 50 sank 5.06%, France’s CAC 40 tumbled 4.89%, Germany's DAX plunged 4.80%, while Britain's FTSE 100 posted a 2.81% decline.

During the Asian trading session, Hong Kong's Hang Seng Index tumbled 2.5%, while Japan’s Nikkei 225 Index fell 1.7%.

Later in the day, the Institute of Supply Management is to produce a report on U.S. manufacturing activity.