Global stocks were steeply lower on Monday and the euro fell to its lowest level in two years as concerns about Spain’s financing problems plagued markets anew.


Following on the heels of losses in Europe and Asia, the sell-off caught fire on Wall Street in early trading. By early afternoon, the losses had moderated, with the Dow Jones industrial average down 1 percent, or 127 points, and the broader Standard & Poor’s 500 was down 1.2 percent. The Nasdaq fell 1.5 percent.


The trend in the United States was set in global markets after Spain’s borrowing costs soared to record levels, with the yield on the 10-year Spanish government bonds hitting as high as 7.5 percent. At that level, many analysts fear Spain could eventually be shut out of public markets and forced to seek a Greek-style bailout.


In another sign of the market worries, Spain’s stock market regulator banned short-selling of all stocks for three months, citing “extreme volatility.” Italy enacted a similar but shorter ban.


Phil Orlando, chief equity market strategist at Federated Investors, said that the “first domino” dropped in Asia, where there were concerns over the fiscal and monetary policy in China and whether that country was done with rate cuts. In the United States, earnings were not encouraging and gross domestic product was forecast to be lower than the previous number, he added.


“There were no pockets of good news,” he said.


At the close in Europe, the Euro Stoxx 50 index was down 2.6 percent. The Spanish IBEX was down 1 percent, the DAX in Germany fell more than 3 percent and the CAC 40 in France was lower by 2.9 percent.


Amid the equities volatility, investors sought what they perceived as havens, with increased demand for the United States 10-year Treasury bond sending the yield down to 1.43 percent.


Bruce McCain, the chief investment strategist of Key Private Bank, said that the markets were sending a “flight to quality” message, and with “Europe again melting down,” the focus was on safety and preservation.


“In general, most of our conversations with clients are focused on preserving principal,” he said.


“With the severe fundamental problems in the European markets and slowing in U.S., China and the rest of the world, this is not the time to take heroic risks. We have seen a waning of the optimism in the market.”


Mr. McCain noted that in general, corporate earnings in the United States have been beating expectations but forecasts have been revised lower.


“There is not a whole lot to stem the tide,” he said.


Crude oil prices slid. West Texas intermediate crude traded in New York down nearly 3 percent at $89. Energy, financials, materials and information technology stocks were down more than 1 percent.