Safe investments rose and riskier ones fell as traders continued their long vigil for a more permanent solution in Europe. Leaders there are considering a centralized system of bank regulation and deposit insurance to complement proposals of closer economic coordination.
"It doesn't appear that any lasting solution is a possibility any time soon," Schwab's Gibley said. "Until we get some kind of coming together, volatility is likely to continue."
Attention shifted Monday toward Spain and Italy, both of which will require international help if they can't convince bond investors that their finances are sound. Benchmark stock indexes closed down 3 percent in Spain and 2.8 percent in Italy.
The yield on the 10-year Treasury note fell to 1.58 percent from 1.63 percent earlier Monday as demand increased for low-risk investments.
The yield on Spanish 10-year bonds jumped as high as 7.18 percent, the highest since Spain joined the euro. Only a week ago, Europe unveiled a massive bailout of Spain's banks intended to reassure investors about the nation's finances.
Greece, Ireland and Portugal needed bailouts after their borrowing costs rose above 7 percent. It looks like tiny Cyprus will need a bailout as well.
The Greek election "should be seen as a significant net positive for markets, but markets don't always react in a rational manner," said David Kelly, chief global strategist for JPMorgan Funds.
The ISE Homebuilders index rose 34 cents, or 3.5 percent, to $9.98. Lennar, PulteGroup, D.R. Horton, Toll Brothers and Hovnanian Enterprises all rose strongly.
Giant military contractor SAIC fell 38 cents, or 3.1 percent, to $11.86. The Defense Department said Friday that SAIC had lost its biggest contract to Lockheed Martin, a $4.6 billion deal to run the department's global network.
Energy prices, which are sensitive to investors' expectations of future economic growth, fell. Benchmark crude for July delivery slid 76 cents to $83.27 per barrel in electronic trading on the New York Mercantile Exchange.
Daniel Wagner can be reached at www.twitter.com/wagnerreports.