Source: CNBC

Stocks were down sharply across the board Monday, fueled by fears that Spain will need a full sovereign bailout and mounting worries that Greece may leave the euro.

The Dow Jones Industrial Average plunged almost 200 points, led by Alcoa[AA  8.07    -0.19  (-2.3%)   ] and Microsoft [MSFT  29.14    -0.975  (-3.24%)   ].

The S&P 500 and the Nasdaq also dropped sharply. The CBOE Volatility Index, widely considered the best gauge of fear in the market, surged almost 25 percent to trade near 20.

All 10 S&P sectors were firmly in negative territory, led by techs andmaterials.

The Dow, S&P 500 and Nasdaq are now lower for the month of July.

A number of regional governments in Spain are set to request central government aid, heightening fears that the country will require a full-scale bailout. Spanish bonds yields surged to their highest levels since the euro was created in 1999.

Euro zone finance ministers approved terms for a loan of up to 100 billion euros for Madrid to recapitalize its banks last week.

Adding to woes, Spain’s economy contracted in the second quarter.

Concerns over Greece also returned amid worries that the IMF may no longer provide financial aid to the debt-ridden nation, according to a report in Germany’s Der Spiegel, sparking fears the country could run out of money as early as September. And Greece’s Prime Minister Antonis Samaras warned that the country was facing a new “Great Depression.”