"There's a lot of concern about how much time it will take for Europe to get its collective act together," said Tom Schrader, managing director at Stifel Nicolaus.
The Dow Jones industrial average (INDU) ended down 247 points, or 2.1%. The S&P 500 (SPX) fell 24 points, or 1.9%, and the Nasdaq (COMP) lost 53 points, or 2%.
Over the weekend, finance ministers from the world's largest economies pledged to take "all necessary actions" to stabilize global financial markets and ensure that banks are well-capitalized. (G-20 finance chiefs back Europe bank rescue)
Officials promised to have a comprehensive plan to secure the banking system and address Europe's sovereign debt problems in place by next Sunday, when the European Council meets in Brussels.
But early Monday, German Finance Minister Wolfgang Schaeuble tempered those expectations, saying that a final solution to Europe's debt crisis is unlikely to come out of the upcoming meeting.
"As last week's market gains attest, the direction of the financial markets remains highly dependent on the degree to which politicians and policymakers can create a solution to the European debt crisis," Bob Doll, chief equity strategist at BlackRock, said in a client note.
Though recent progress has been encouraging, "it is impossible to accurately determine whether the worst of the crisis has passed or whether we have only begun to see the negative impact of the region's debt problems," Doll added.
While Europe will remain in focus on Wall Street, earnings news will give investors something else to chew on, and positive results and guidance from companies could help stocks break above the recent trading range, said Matt King, chief investment officer at Bell Investment Advisors.
The dollar rose against the euro and the British pound slipped slightly against the Japanese yen.
Oil for November delivery lost 42 cents to settle at $86.38 a barrel.
Gold futures for December delivery slipped $6.40 to settle at $1,676.60 an ounce.
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