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Updated from 1 p.m. EDT

Update: Stocks closed near their lows of the session with the Dow down 297 points, or 2.5%, to 11,656, and has fallen about 645 points from Friday's intraday high above 12,300. Meanwhile the S&P lost 2.8% and the Nasdaq fell 2.9%. The dollar rose sharply vs. the euro and Treasury prices spiked as traders fled from so-called risk assets and reconsidered the wisdom of a 5-week rally that (apparently) peaked last week.  (See: Reality Check After the Rally: No Solutions for Europe or Cash-Strapped Consumers)

Stocks mounted an ill-fated comeback effort Tuesday afternoon amid reports the Greek referendum was DOA. But the rally faded after a Greek government spokesman said the vote will proceed as originally scheduled. Headlines about U.S. lawmakers considering a financial transaction tax further added to the negative mood on Wall Street.

Earlier: Greek Prime George Papandreou sent shock waves across global markets Tuesday

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Updated from 2:11 p.m. EDT

There are a hundred story lines to be written about the fall of MF Global, the latest victim of Europe's sovereign debt crisis.

MF Global collapsed after a regulatory filing last month revealed its heavy bets on European sovereign debt, prompting credit rating downgrades and investors pulling their funds. Those investors able to get money out of the firm are no doubt relieved today, as reports emerge that about $700 million of MF Global's customer funds cannot be accounted for.

MF Global was "not in compliance" with rules that prohibit brokerage firms from commingling client funds with their own monies, the head of the Chicago Mercantile exchange said Tuesday. "While we are unable to determine the precise scope of the firm's violation at this time, we are investigating the circumstances of the firm's failure."

(Update: An MF Global executive has admitted to federal regulators that the company used clients funds as