Stocks fell on Monday as oil prices turned sharply lower and spooked investors into dumping shares of drillers and other energy-service companies.
At the close on Wall Street, the Dow Jones industrial average lost 106.3 points, or 0.6 percent, to 17,852.5. The Standard & Poor's 500 index fell 15.06 points, or 0.7 percent, to 2,060.31 and the Nasdaq composite gave up 40.06 points, or 0.8 percent, to 4,740.69.
The drop in oil weighed on stocks from the start of trading. Weak trade figures out of China and news that Japan's recession is deeper than initially thought suggested demand for crude would be lower in those two economies. Among the big losers were two Dow Jones industrial average components, Chevron, down 3.7 percent, and Exxon Mobil, off 2.3 percent.
Energy shares in the Standard & Poor's 500, a broader index than the Dow, dropped to their lowest level in nearly two years. The decline of 3.9 percent was by far the biggest percentage drop among the 10 sectors in the index. Six of the 10 sectors fell.
Selling was especially fierce in shares of smaller companies in the oil business. Cimarex Energy, Transocean, and Noble Energy were each down at least 5 percent.
More broadly, the six-month drop in oil, which has brought the price of crude down to the lowest level in five years, suggests headwinds for the U.S. economy, said Bill Strazzullo, chief market strategist at Bell Curve Trading.
"When you look at the major drivers of global growth -- Japan, China and the eurozone -- they're really struggling," he said. "Can the U.S. continue to grow at a moderate pace when the rest of the world is having major problems?"
Benchmark crude oil dropped $2.79 to $63.05 a barrel in New York. Brent crude, which is used to price oil sold on international markets, dropped $2.88, or 4 percent, to $66.19 a barrel. Both prices are at their lowest levels since 2009.
In other energy futures trading:
-- Wholesale gasoline dropped 6.68 cents to $1.707 a gallon
-- Heating oil fell 5.29 cents to $2.055 a gallon
-- Natural gas plunged 20.7 cents to $3.595 per 1,000 cubic feet.
Bond prices rose. The yield on the 10-year Treasury note fell to 2.26 percent.