Dow Plunges 350 Points as Possible Greek Default Looms

The uncertainty surrounding Greece’s ongoing debt crisis choked global markets on Monday, extending recent losses for the world’s stock exchanges.

The Dow Jones Industrial Average closed the day down 350 points, or 2%. The S&P 500 dropped 2.1%, ending the day at 2,058 points. Meanwhile, the tech-heavy Nasdaq composite was hit hardest, falling 122 points (or 2.4%) to end the day under the 5,000-point mark for the first time since early-May.

It was the worst day of the year for U.S. stocks.

Earlier, volatility struck markets around the world, as global markets felt the impact of the uncertainty in Greece, where banks are closed and ATM withdrawal limits have been imposed. The Chicago Board Options Exchange Volatility Index (VIX) — also referred to as the “fear index” — soared on Monday, rising by nearly 5 points, or 35%, to reach its highest levels in about four months.

Greek citizens will vote this weekend on a new bailout proposal that could bring billions of dollars in additional aid into the troubled country while installing strict austerity measures. A “no” vote on the bailout extension, meanwhile, would likely pave the way for Greece’s withdrawal from the euro zone.

Also, on Monday, ratings agency Standard & Poor’s once again downgraded Greece’s credit rating — to CCC- — in an assessment that predicted a Greek default within six months.

S&P said there’s now a 50% chance Greece will leave the euro.

In addition to fears about Greece, investors are concerned about Puerto Rico’s ability to pay its debts and continued weakness in China.