Stocks fell on Monday as a sharp drop in oil prices prompted investors to sell some energy companies' shares, while a global forecast fueled worries about the sustainability of an economic recovery.
The World Bank said prospects for the global economy remain unusually uncertain as it cut 2009 growth forecasts for most economies.
While lower crude oil prices tend to be a positive for the broader stock market, they tend to hurt shares of energy companies by giving investors a reason to unload some holdings in that sector. The front-month price of crude fell $2.62, or almost 4 percent, to settle at $66.93 a barrel. Exxon Mobil Corp
Monday's pullback follows losses last week for the three major indexes and investors speculating about more obstacles for the stock market after its three-month rally.
There are traders desiring to take some profits at these levels if indeed the market is headed for a correction, said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York.
Crude oil was down from the get-go and that is a weak sector here, he said.
The Dow Jones industrial average <.DJI> dropped 168.53 points, or 1.97 percent, at 8,370.82. The Standard & Poor's 500 Index <.SPX> shed 23.47 points, or 2.55 percent, to 897.76. The Nasdaq Composite Index <.IXIC> slid 51.95 points, or 2.84 percent, to 1,775.52.
On the Nasdaq, big-cap technology stocks led the decline.
Apple's stock fell 1.5 percent to $137.42 even as it said it had sold more than 1 million of its newest iPhone in the first three days of its launch, beating expectations. The company statement also quoted Chief Executive Steve Jobs, leading at least one analyst to speculate he was back from medical leave.
Adding to a glum economic outlook, Walgreen Co
Metal prices also slid, dragging down shares of resource companies. Freeport-McMoRan Copper & Gold Inc
(Editing by Jan Paschal)