Stocks fell on Monday as concerns about the global economy's health weighed on Wall Street, following a hefty sell-off in Chinese equities.
Energy shares led the decline after the sharp drop in China's main stock index increased worries about a potential rebound in global energy demand and oil slipped below $70 a barrel.
Shares of Chevron Corp
The Shanghai Composite index <.SSEC> fell nearly 7 percent to a three-month low on fears that China's government is trying to moderate economic growth and choke off some speculation in its stock market by tightening bank lending.
China's decline is just scaring people, said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York.
The world is partially relying on China's economic growth to bring us out of this recession, and given the decline in China, there have to be concerns.
Stocks in China have risen steadily, up 91 percent for the year at one point, despite the global recession. Commodity prices often got a boost from an increased demand from China.
The Dow Jones industrial average <.DJI> was down 68.17 points, or 0.71 percent, at 9,476.03. The Standard & Poor's 500 Index <.SPX> fell 9.81 points, or 0.95 percent, to 1,019.12. The Nasdaq Composite Index <.IXIC> dropped 23.54 points, or 1.16 percent, to 2,005.23.
The Bank of New York Mellon index of leading Asian ADRs <.BKAS> fell 1.5 percent to 119.98 while U.S.-listed shares of China Finance Online
Financial stocks, which enjoyed a strong rally last week, changed their course after a number of bearish notes from analysts.
Rochdale Securities analyst Richard Bove wrote that in the short term, a reaction to the recent move up in the stocks may develop. [ID:nN31432623]
In addition, Barron's recommended profit-taking in Citigroup
Citi was down 3.8 percent at $5.03 while AIG dropped 10.7 percent to $44.88.
The weakness in energy and financial stocks overshadowed the news of two large mergers on Monday.
Walt Disney Co
Marvel shares soared 25.4 percent to $48.46, while BJ Services' stock was up 4.6 percent at $16.15.
Also on Monday, the Institute for Supply Management-Chicago's business barometer rose to 50.0 in August. The level was higher than expected, and was on the dividing line between growth and contraction in the sector.
(Editing by Jan Paschal)