U.S. stocks were modestly lower by mid-afternoon Monday as a selloff in crude oil accelerated and punished the energy sector.
The S&P 500 was down 0.5%, the Dow Jones Industrial Average fell 0.2%, and the Nasdaq slid 0.87%.
Worries over weaker demand from China were pulling crude oil prices lower to begin the week. Analysts at Morgan Stanley forecast oil prices could drop into the $20s as the U.S. dollar strengthens against other currencies. West Texas Intermediate crude oil fell 6.5% to $31.02 a barrel, extending a decline of more than 10% last week.
The energy sector was the worst performer on markets Monday. Major oilers Exxon Mobil (XOM) - Get Report , Chevron (CVX) - Get Report , Royal Dutch Shell (RDS.A) and ConocoPhillips (COP) - Get Report were all lower, while the Energy Select Sector SPDR ETF (XLE) - Get Report fell 2.7%.
China's benchmark index sank more than 5% on Monday as investors worried officials had lost control of the world's second-largest economy. The Shanghai Composite fell more than 10% last week after the People's Bank of China continued to devalue the yuan in an attempt to stabilize a weakening manufacturing sector.
"For now, we expect equity markets will be dominated by issues in China, and sentiment may remain bearish until investors believe policymakers will be able to stabilize economic and financial conditions," said Bob Doll, chief equity strategist at Nuveen Asset Management.
Stocks closed out last week with a big loss, overpowering a blockbuster jobs report The selling continued into Friday's close and sent the S&P 500 skidding 5.5% for the week, its worst start to a new year ever.
Fitbit (FIT) - Get Report extended its losing streak into a new week. Shares have fallen nearly 40% since the beginning of the year as the wearables company prepares to enter the high-end smartwatch market currently dominated by Apple (AAPL) - Get Report .
Arch Coal (ACI) - Get Report filed for Chapter 11 bankruptcy as its tries to unload $4.5 billion in debt through a restructure. The company expects mining operations to continue as normal through the reorganization.
Disney's (DIS) - Get ReportStar Wars: The Force Awakens continued to break new records after logging the best Saturday opening day in history in China. The film generated $33 million in its opening day and analysts expect a total gross between $200 million and $330 million by the end of its run.
Alcoa (AA) - Get Report will likely announce a $1.5 billion long-term supply contract with General Electric's aviation unit shortly, according to a report in The Wall Street Journal. The announcement could go some way to assure investors ahead of its earnings report due for release after the bell. The aluminum producer is expected to have seen a 17% drop in revenue in the last quarter.
Department store chain Kohl's (KSS) - Get Report is reportedly considering a go-private proposal, though discussions are still in the preliminary stage. The board is expected to discuss the proposal as well as the possibility of a breakup this week. Shares were up nearly 5%.
Apple (AAPL) - Get Report jumped 1% after Mizuho Securities upgraded the stock to buy. The firm said the company has "meaningful" upside potential, particularly after a recent selloff triggered by fears over weaker demand for iPhones.