Wall Street was sharply lower Monday with the major U.S. equity averages all down at least 1% as Greek default fears roiled global markets. Reports that Spain plans to bailout the country’s third-largest bank by assets, Bankia, were also adding to ongoing uncertainty in the eurozone.

The Dow Jones Industrial Average was giving up 183 points, or 1.4%, at 12,825. The S&P 500 was shedding 20 points, or 1.5%, at 1353, and the Nasdaq was losing 53 points, or 1.8%, at 2904.

Breadth within the Dow was overwhelmingly negative with 28 of the index’s 30 components moving lower. The biggest percentage losers among the blue chips were Alcoa (AA), Bank of America (BAC),Caterpillar (CAT), Hewlett-Packard (HPQ),Home Depot (HD), and Intel (INTC), all down more than 2%.

Bank of America shares lost ground as CEO Brian Moynihan faces a May 18 deadline to give testimony in a lawsuit brought by MBIA (MBI), an event that’s seen as putting increased pressure on the bank to reach a settlement expected to cost some $2 billion, according to an analyst.

AT&T (T) and Verizon Communications (VZ) were ticking higher.

In the broader market, losers were outpacing winners by a margin of 4-to-1 on the New York Stock Exchange, and 3-to-1 on the Nasdaq.

Stocks barely budged Monday as Wall Street reacted with restraint to the shifting political landscape in Europe following weekend elections in France and Greece. But investor worries were intensified Tuesday as the political gridlock in Greece showed no signs of relief.

“Greece is still facing a very, very difficult task in order to stay in the eurozone,” said Dan Greenhaus, chief global strategist at BTIG.

The Greek conservative New Democracy party, which garnered most of the votes in Sunday’s election, has been unable so far to form a new government. The onus is now on Alexis Tsipras, the leader of the second-biggest party, the radical left Syriza. His party wants to wipe out the European Union austerity measures tied to the financial bailouts.

Expectations are that Tsipras won’t reach any breakthroughs either, and that Greece will eventually be forced to hold another general election. Without a government to negotiate the next tranche of a bailout, the global markets face the growing risk of Greece defaulting on its debt and exiting the euro.

“If/when that [Tsipras' task] fails, a second round of elections will need to take place, most likely on or around June 17th,” said Greenhaus. “If/when those elections fail to produce a government in favor of the agreed upon austerity measures, it would be all but certain that external financing would cease and the €31 billion or so set to be disbursed this quarter would … not.”

The next government must decide by June if it will pay interest on $250 million of 4.5% notes expiring in 2016, and by next week if it will pay €436 million ($568 million) due on a floating-rate note issued 10 years ago.

In Europe, London’s FTSE was ticking down 0.3% and the DAX in Germany was off 0.6%. The Hang Seng Index in Hong Kong finished down 0.3%. Japan’s Nikkei average rose 0.7%.

A Financial Times report said Spain was planning a state bailout of Bankia. The report said the move would likely involve the injection of billions of euros of public money into the troubled lender.

The benchmark 10-year Treasury was rising 8/32, diluting the yield to 1.852%. The dollar was up 0.1%, according to the dollar index.

In commodity markets, the June crude oil contract was off 56 cents at $97.38 a barrel. June gold futures were falling $11.20 to $1,627.90 an ounce.

In corporate news, Wendy’s (WEN) reported first-quarter earnings Tuesday of $12.3 million, or 3 cents a share, a turnaround from a year-earlier loss of $1.4 million. Excluding items, earnings in the latest quarter came in at a penny a share. The fast food chain’s first-quarter sales were $519.9 million, up from $509.3 million a year earlier.

The performance fell short of the average analysts’ view for a profit of 3 cents a share on sales of $608 million, and the stock was off 3%.

Dow component Walt Disney (DIS) is slated to report its fiscal second-quarter results after the closing bell. Wall Street’s consensus view is calling for earnings of 55 cents a share on revenue of $9.56 billion. Shares were down 1.2%.

McDonald’s (MCD) said Tuesday that global same-store sales in April rose 3.3%. Last month, the fast food chain said it expected sales to rise about 4%. Shares of Mickey D’s were falling 1.5%.

Rackspace Hosting (RAX), the cloud hosting company, reported first-quarter earnings of $23.2 million, or 17 cents a share, up from year-earlier earnings of $13.8 million, or 10 cents a share. Analysts, on average, expected earnings of 18 cents a share. The stock dropped nearly 13%.

So far, 85% of S&P 500 companies have reported, with 67% of those beating estimates, 9% matching them, and 24% falling short, according to data fromThomson Reuters.

The Street