1st LD Writethru: U.S. stocks plunge on Greece fears

U.S. stocks suffered big losses on Monday as the deterioration of Greek debt crisis rattled market sentiment.

The Dow Jones Industrial Average dropped 350.33 points, or 1.95 percent, to 17,596.35. The S&P 500 shed 43.85 points, or 2.09 percent, to 2,057.64. The Nasdaq Composite Index dived 122.04 points, or 2.40 percent, to 4,958.47.

Greece was in shock on Monday as it woke up to closed banks, capital controls and an increasingly imminent default risk, situations which politicians, analysts, media and ordinary people had feared for.

The leftist government's decision on Saturday to call a referendum on July 5 to decide whether to accept on the stringent terms the creditors had tabled was a catalyst to a string of developments over the weekend.

After the collapse of five-month negotiations, Eurogroup told Athens that the extended bailout that kept the country afloat since 2010 expired on June 30, as agreed in February. The European Central Bank followed by freezing the extra emergency funding for Greek banks.

Meanwhile, Standard & Poor's Ratings Services lowered its foreign and local currency long-term sovereign credit ratings on Greece to 'CCC-' from 'CCC', citing that the probability of Greece exiting the eurozone is now about 50 percent.

Dampening investor sentiment, global stock markets witnessed heavy sell-offs on Monday. European equities dived on Greece uncertainty, with Spanish stock market index Ibex-35 plummeting 4. 56 percent.

In Asia, Tokyo stocks plunged as investors feared Athens would default on an upcoming repayment, with the 225-issue Nikkei Stock Average dropping 2.88 percent, its biggest points drop this year.

Chinese shares saw sharp fluctuations on Monday despite unexpected rate cuts from the central bank rolled out on Saturday, with the benchmark Shanghai Composite index shedding 3.34 percent.

On the economic front, U.S. pending home sales continued to rise in May. The Pending Home Sales Index climbed 0.9 percent from 111.6 in April to 112.6 in May, the highest level in over nine years, according to the National Association of Realtors.

Investors will also keep a close eye on Thursday's nonfarm payrolls report for further indications on the timing of a rate hike. Endite