The Dow Jones Industrial Average followed its biggest weekly gain of the year with a steep slide, snapping a four-day winning streak as financial and commodity stocks sank.

The Dow industrials snapped a four-day winning streak as investors questioned whether Madrid's weekend agreement to seek bailout funds for its banks will restore confidence in the Spanish economy. Paul Vigna has details on The News Hub. Photo: AP.

The 30-stock blue-chip gauge declined 142.97 points, or 1.1%, to 12411.23. The Standard Poor's 500-stock index fell 16.73 points, or 1.3%, to 1308.93. Shares of financial companies led declines across nine of the index's 10 sectors, while telecommunications stocks edged higher. The Nasdaq Composite shed 48.69 points, or 1.7%, to 2809.73.

The blue-chip Dow climbed by about 96 points shortly after the opening bell, but quickly reversed course and eventually turned negative within a half hour and fell further ahead of the close as early optimism over the bailout of Spain's banks faded. Selling accelerated during the final hour of the trading day, and the major stock benchmarks closed near their lows for the session.

Financial stocks were among the session's worst performers. Bank of America (BAC) shares dropped 28 cents, or 3.7%, to $7.28, the biggest percentage decline among Dow components.

Monday's topsy-turvy trading marked another turn in a volatile recent stretch for the markets. Last week, stocks slumped on the heels of a weaker-than-expected May employment report, but then rallied on signs that the Federal Reserve was prepared to step in to help stimulate sluggish U.S. growth.

Associated Press

Traders work on the floor of the New York Stock Exchange last week.

Even after Monday's decline, the Dow industrials are up 1.6% for the year to date and 2.6% above their 2012 closing low, touched on June 4. But they are up just 0.1% for the month.

Tracking the stream of developments in Europe's debt crisis appears to be weighing on some stock investors.

"Markets are tired of these inconsistent rescue plans thrown piecemeal at Europe," said Adrian Cronje, chief investment officer at Balentine in Atlanta.

Stocks in Europe also slumped Monday following early signs of optimism. The Stoxx Europe 600 ended down by less than 0.1% after seeing earlier gains of as much as 1.9%. Spain's IBEX-35 stock index closed with a decline of 0.5% after surging as much as 5.9%. Meanwhile, investors fled Spanish debt, sending the yield on Spain's 10-year bond 0.29 percentage point higher to 6.47%, its biggest daily increase since December.

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Over the weekend, Spain requested up to €100 billion ($125 billion) in loans from the European Union to assist its banks. Statements about the deal left several open questions, including the exact amount of aid the country will need and how the funds will be distributed.

"It just pushes back the day of reckoning," Ben Halliburton (HAL), managing director at Tradition Capital Management in Summit, N.J., said of the planned bailout.

Asian markets gained after the Spain news and also benefited from Chinese economic data that exceeded some expectations. Japan's Nikkei Stock Average rose 2% and China's Shanghai Composite gained 1.1%.

Crude oil futures fell 1.7% to settle at $82.70 a barrel, while gold futures gained 0.3% to finish at $1,595.50 a troy once. The dollar gained against the yen and the euro.

Among notable stock moves in the U.S., Apple (INMD) shares edged down 9.15, or 1.6%, to 571.17 after the company unveiled updated Mac laptops and other new products and software at its annual developers conference.

Alpha Natural Resources (INMD) fell 86 cents, or 9.2%, to 8.46, leading declines in the S&P 500 and hitting an all-time intraday low, as a selloff in coal stocks continued amid the industry's competition with cheap natural gas.

Progress Energy (cnc) shares climbed 1.47, or 2.5%, to 59.60 as the utility operator said a decision by federal regulators would enable Duke Energy (DUK) to complete its $26 billion all-stock acquisition of the company by July 1.

Centene tumbled 7.89, or 22%, to 27.58. The Medicaid insurer lowered its 2012 earnings outlook.

Forest Laboratories (FRX) eased 1.26, or 3.5%, to 34.43 after lowering its current-year earnings forecast, saying it was hit harder than expected after its depression treatment Lexapro lost patent protection in March.

Diamond Foods (DMND) dropped 1.53, or 7.6%, to 18.63. The snack maker said it won't meet a deadline to file its delayed quarterly reports and expects to get a delisting warning from the Nasdaq Stock Market, the latest fallout from accounting irregularities unveiled last year. The accounting problems led to the firing of top executives in February and the nixing of its planned purchase of Pringles from Procter & Gamble.

EnergySolutions (ES) slumped 1.97, or 55%, to 1.62. The provider of nuclear-power services such as plant decommissioning lowered its outlook, citing a slowdown in government and commercial businesses.

Write to Matt Jarzemsky @dowjones.com