NEW YORK (TheStreet) -- Stocks resumed their selloff on Monday, squashed again by the free fall in oil prices.

"The main problem is that oil has not yet found a level where it can stabilize," said Wells Fargo chief international strategist Paul Christopher in a call.

West Texas Intermediate plummeted more than 4% to $55.20, its lowest point since May 2009, after secretary general of OPEC, Abdallah Salem el-Badri, said the oil cartel had not set a fixed oil-price target. Separately, United Arab Emirates oil minister Suhail Al-Mazrouei said the group would stick to production levels even if oil falls to $40 a barrel.

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"If [OPEC members] were to change the tone of their remarks or if they were to stabilize the discounts on their own prices to Asian, African and Middle Eastern customers that might be taken as a positive" said Christopher as to a potential stabilizing factor.

The S&P 500 moved off session lows, though closed down 0.64%. The benchmark index traded below the 2,000 level for the first time since Oct. 30 after suffering its worst week in more than two years last week. The Dow Jones Industrial Average fell 0.6%, and the Nasdaq was down 1.04%.

Energy was again one of the worst-performing sectors of the S&P 500 with the Energy Select Sector SPDR ETF (XLE) sliding 0.92%. Over the past six months, the industry ETF has tanked more than 25% as the price of oil cratered 48% from its own mid-summer peak.

Nerves were also high ahead of the Federal Reserve's two-day meeting which kicks off Tuesday. "I think it likely that last week's adjustment to equity prices had, not only to do with crashing prices for Crude, but also a little something to do with anticipation of a change in Fed language," said economist Stephen Guilfoyle in a blog post.

Fed-watchers anticipate the central bank will remove its longstanding pledge to keep interest rates at near zero for a "considerable time" in its Wednesday announcement. Economists then expect the first interest rate hike as soon as the second quarter next year after years at an artificially low level.

In M&A news, PetSmart (PETM) shares spiked more than 4% after it agreed to be acquired by a group of private-equity investors led by BC Partners. The acquisition is valued at $8.7 billion, or $83 a share.

Riverbed Technology (RVBD) climbed 8.3% on news it will be acquired by Thoma Bravo and the private-equity branch of the Ontario Teachers' Pension Plan for $3.6 billion, or $21 a share, a 12% premium to the tech company's Friday close.

Talisman Energy (TLM) rocketed 19.4% higher after confirming discussions with Repsol, among others, for a potential transaction. Canada Pension Plan Investment Board is also exploring a bid, Bloomberg reported.

Analyst actions also moved markets. Ford (F) shares slid 4.7%, after Deutsche Bank downgraded the automaker to "hold." Analysts said they grow more cautious as the domestic auto industry enters its sixth year of recovery.

Cirrus Logic (CRUS) surged 21.8% as Barclays upgraded the stock to "overweight" and more than doubled its price target to $28. The firm believes the company's chips will be increasingly used in current iPhones and future models of the Samsung Galaxy.

Oracle (ORCL) shares added 2.9% after Morgan Stanley analysts raised their rating on the stock to "overweight" on "low expectations and weak sentiment" heading into the company's earnings report on Wednesday.

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-- Written by Keris Alison Lahiff in New York.

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