DOW - I thought it could be worse

Dow

11,401.01

-108.08

-0.94%

By: JeeYeon Park

CNBC.com Writer

Stocks staged a strong comeback in the final hour of trading Monday, cutting their losses by more than half, following a report that the Greek finance minister official said the debt-ridden nation may be close to a deal with its international lenders, according to Reuters.

Still, stocks ended lower, snapping a five-day winning streak.

The Dow Jones Industrial Average fell 108.08 points, or 0.94 percent, to finish at 11,401.01. The Dow was down more than 250 points in its session lows.


The S&P 500 slumped 11.92 points, or 0.98 percent, to finish at 1,204.09. The Nasdaq slipped 9.48 points, or 0.36 percent, to end at 2612.83, after briefly turning positive.


The CBOE Volatility Index, widely considered the best gauge of fear in the market, jumped near 33.

Greece is "close to an agreement" with the Troika (EU, IMF and ECB) to receive the next installment of bailout funds, according to Reuters, citing a Greek finance ministry official following an earlier conference call between Finance Minister Evangelos Venizelos and the international lenders.




"Some work still needs to be done...Some measures (for 2011 and 2012) need to be quantified," the official told Reuters on condition of anonymity.



Earlier, the Greek government had said the conference call could last until early Tuesday and be continued later in the day.

“There’s a constant battle with how serious this contagion is in Europe versus the fundamentals on the ground,” said Jim Paulsen, chief investment strategist at Wells Capital Management. “We’re going to get volatility for a while.”

“The European tends to have greater impact on the U.S. stock market when you get an empty economic calendar and when you don’t have any other data,” noted Paulsen, adding that if the economy picks up and shows a bounce, investors will be less worried over Europe.

European shares finished sharply lower after euro zone leaders said the next tranche of Greece aid will not be given unless the debt-ridden nation meets stricter deficit targets, spreading fears of a possible default. In addition, the widely-anticipated meeting between EU finance ministers broke no new ground over the weekend in dealing with the debt crisis.

President Obama proposed $1.5 trillion in new taxes as a way to reduce the nation's long-term deficit and to slow down the country's increasing national debt. Obama's tax plan mainly targets the wealthy and draws sharp contrasts with congressional Republicans.

Obama's announcement comes just a few days after House Speaker John Boehner ruled out tax increases to lower deficits.