NEW YORK ( TheStreet) -- U.S. stocks tumbled Monday as fears of a Chinese banking crisis were heightened as three Federal Reserve presidents offered competing views about the central bank plans for the stimulus measures that have helped fuel stocks for more than a year.

The S&P 500 lost 1.2% to 1,573.09 after dropping as much as 2% during the session before those losses were pared to a decline of 0.6%.

Stocks appeared to have rebounded after hitting its session low before Dallas Fed President Richard Fisher, who is not a voting member of the Federal Open Market Committee, said he favors the central bank scaling back its quantitative easing programs.

Earlier in the day, comments from New York Federal Reserve President William Dudley, an FOMC voting member, that the Fed ought to be more aggressive in its bond-buying program if it is to reach its inflation and employment targets, appeared to calm investor concerns.

Separately, Minneapolis Fed President Narayana Kocherlakota also on Monday said the bank needs to provide clearer language about the longer-term Treasury and mortgage-back securities purchases. Kocherlakota said the bank needs to continue the monthly purchases at least until the unemployment rate dipped below a 7% threshold.

The benchmark 10-year Treasury note was sliding 9/32, boosting the yield to 2.572%.

"In terms of the 10-year, I think a lot of it is an overreaction; the timetable that Fed Chairman Ben Bernanke outlined only plays out under what I could call a perfect scenario," said Greg McBride, senior financial analyst at "A 100 basis-point jump in the 10-year Treasury note yield since May based on what amounts to no new information is very surprising."

"The last few weeks have marked merely the beginnings of the turnaround that will have equities back on the road south, to near beginning of year levels, over the course of the second half of this year, "Gina Martin Adams, the New York-based institutional equity strategist at Wells Fargo Securities said in a client note.

Stocks with heavy exposure to coal energy and coal mining were among the biggest percentage decliners on the S&P 500. Cliffs Natural Resources ( CLF) tumbled 7.6% to $15.88, Peabody Energy ( BTU) fell 7.2% to $14.85, and CONSOL Energy ( CNX) dropped 5.8% to $28.05.

The Shanghai composite plummeted 5.3% on Monday, its most severe single-session drop in nearly four years as the People's Bank of China indicated the country's largest banks should limit risky loans to strengthen their balance sheets.

The S&P is down nearly 5% in June, driven by expectations that the Fed is poised to taper its bond-buying program that has helped the gauge climb more than 100% from its March 2009 lows.

The Dow Jones Industrial Average slumped 0.94% to 14,659.56. The Nasdaq dropped 1.09% to 3,320.76.

Wells Fargo Securities's Adams forecasts that the S&P 500 will end the year at 1,440, up marginally from her previous estimate of 1,390 and predicts a mid-year 2014 price target of 1,530. The outlook is based on the assumption that earnings growth remains lackluster while the Fed will pursue a strategy of tapering asset purchases later this year, with the intention of ending the bond purchase program in early-2014.

The worst performer in the S&P was Allergan ( AGN ) which plunged 11.6% to $81.99 after the U.S. Food and Drug Administration released a draft guidance for generics to Restasis, heightening worries about generic competition and prompting downgrades at multiple firms.

Tenet Healthcare ( THC) was a bright spot in the S&P, earning the top spot in the index as shares jumped 4.5% to $43.73 as the healthcare provider said it is buying Vanguard Health Systems ( VHS ) in a deal that further consolidates the U.S. healthcare industry in the wake of the passage of the Affordable Care Act (ACA). Vanguard surged 67.3% to $20.70.

August gold futures slid $14.90 to $1,277.10 an ounce. August light sweet crude oil futures jumped $1.49 to close at $95.18 a barrel.

Written by Andrea Tse and Joe Deaux in New York

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