Debt worries hang over the stock market

• 
  FILE - In the June 22, 2011 file photo, traders work on the floor of the New York …
  

 Debt worries continue to hang over the stock market, overshadowing a string of strong earnings reports Monday.

Europe's banking troubles and a debate over lifting the U.S. government's borrowing limit helped drag down markets in the U.S., Asia and Europe Monday.

Traders are keeping watch on negotiations in Washington to raise the U.S. government's debt ceiling. The Treasury Department says the limit must be raised by Aug. 2 or the government risks defaulting on its debt. Rating agencies warned last week that the impasse puts the country's top AAA credit rating grade at risk.

The results of stress tests on European banks released Friday did little to reassure investors. Of the 90 European banks tested for how they would fare in a recession, eight flunked. Another 16 barely passed.

The Dow Jones industrial average fell 97 points, or 0.8 percent, to 12,382 in early trading. The S&P 500 index dropped 8 points, or 0.6 percent, to 1,307. The Nasdaq fell 19 points, or 0.7 percent, to 2,770.

 Gannett Co., oil-field services company Halliburton Co. and discount brokerage Charles Schwab Corp. all reported higher earnings.

Hasbro Inc. fell 3 percent. The toy maker's income fell short of Wall Street's estimates despite stronger sales of Transformers action figures and other products.

It's the start of a crowded week for earnings reports. More than 100 members of the S&P 500 index are set to release second-quarter results, including Apple Inc., Johnson & Johnson and General Electric Co. IBM Corp. reports after the close of trading Monday.

Posted in: borrowingmlimits,brokierage,ceiling,corp,debt,defaulting,drag,earning,file,hangover,ibm,overshadowing,rating,schwab,stocks,string,topics,traders,warned