The Dow Jones Industrial Average retreated 294 points, or about 1.8%, to 16,022.
Alcoa surged 5.40% after the aluminium giant unveiled plans to split into two separate companies, while Kellogg rose 1.50% after saying it would buy Egypt-based Mass Food Group in a deal worth approximately $150m.
The Nasdaq Composite dropped 85 points, or 1.8%, to 4,600 also was being dragged lower by a downdraft in the biotech sector. The stock market is on track for its worst quarterly performance in four years.
Bond prices rose. The yield on the 10-year US Treasury fell to 2.14 percent from 2.167 percent Friday, while the 30-year dropped to 2.93 percent from 2.96 percent.
“The market is just not in a really good mood right now”, said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research.
Along with data that may give a clearer reading of China’s economic health, Friday’s USA non-farm payrolls release will be eyed for clues on whether rates might rise this year. Market participants have already been cautious ahead of a week of key economic data, including euro zone inflation on Wednesday, Chinese industrial and service sector PMIs on Thursday and U.S.jobs figures on Friday.
USA stocks fell sharply on Monday amid ongoing worries about the outlook for global growth.
Data on Monday showed USA consumer spending grew briskly in August and a key measure of inflation firmed a bit – signs of strength in America’s domestic economy that could lead the Federal Reserve to tighten despite weakness overseas.
A gauge of pending home sales fell to its lowest level in five months, which points to hesitation from buyers amid rising prices, talk of rates being increased and a dearth of homes on the sales block.
The dollar, which advanced broadly last week as U.S. Federal Reserve Chair Janet Yellen boosted expectations for USA interest rate hikes, was down 0.7 percent at 119.81 yen.
There is also hefty lineup of Fed speakers.
In the afternoon, Chicago Fed President Charles Evans, speaking at the Marquette University Business Leaders Forum in Milwaukee, said the Fed should be in no hurry to raise interest rates. Evans is a voting member of the Fed’s policy-setting committee this year.
A reading on core inflation for August is due at 8:30 a.m. Eastern Time.
Earlier on Monday, Fed Gov. Daniel Tarullo gave a speech on capital regulation across financial intermediaries (http:/ /www.marketwatch.com/story/feds-tarullo-signals-change-to-insurer-regulation-2015-09-28) at a Bank of France conference. Williams fell 7.9 percent, while Energy Transfer slumped 9.7 percent.
VW LOWER AGAIN: Volkswagen shares were down 8.2 percent as German prosecutors opened an investigation against the company’s former CEO, Martin Winterkorn, to establish what his role was in the emissions-rigging scandal.
In company news, oil giant Royal Dutch Shell saw its US-listed shares climb 0.11% ahead of the bell after it said it would stop exploration near Alaska.
METALS: Gold fell $13.90 to $1,131.70 an ounce.