NEW YORK (TheStreet) -- Oil continued to pressure stocks on Monday following a price warning from Goldman Sachs analysts.

The S&P 500 fell 0.98%, climbing back from losses of more than 1% suffered earlier. The Dow Jones Industrial Average dropped 0.72%, and the Nasdaq tumbled 0.97%.

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Goldman Sachs forecast that oil prices will remain lower for longer than expected with West Texas Intermediate averaging $50.40 a barrel this year, far below its previous forecast of $83.75. Crude oil for February delivery fell 4.2% on Monday to $46.31 a barrel.

"The markets are seemingly most fixated upon price stabilization in the oil markets -- and while falling prices hurt energy companies, they help nearly everyone else," said Schwab Center for Financial Research's Randy Frederick in an email. "Given the lack of stability in oil and the disagreement in the indicators for this week, the double-digit moves in both directions we saw in the SPX last week, are likely to continue for awhile."

Also hurting crude prices were pleas from Venezuela and Iran for OPEC to cut oil output that were ignored, the countries' delegates said Monday. OPEC's Gulf States, including Saudi Arabia, have been steadfast in their refusal to cut production lest the organization lose market share. OPEC will gather in June for their next scheduled meeting.

Small-cap energy stocks were the hardest hit with Bill Barrett (BBG) , Basic Energy Services (BAS) , Sanchez Energy (SN) , and Rex Energy (REXX)  suffering heavy losses. The Energy Select Sector SPDR ETF (XLE) dropped 3.2%.

The health care sector was a solo bright spot on a rush of deal news. NPS Pharmaceuticals (NPSP) jumped more than 8% after drugmaker Shire (SHPG) disclosed its agreement to purchase the mid-cap company for $5.2 billion, or $46 a share.

Separately, Switzerland-based Roche  (RHHBY) announced it will acquire a majority stake in Foundation Medicine (FMI) for more than $1 billion. Foundation has been developing gene-sequencing technology to identify tumors and suitable treatments. Foundation spiked 98%. Biogen (BIIB) was 1.8% higher after announcing a $675 million buyout of Convergence Pharmaceuticals, which has developed a portfolio of neuropathic pain treatments.

Despite heavy selloffs early last week, benchmark indexes remain close to all-time highs. However, Goldman's chief U.S. equity strategist, David Kostin, said he believes a pullback from records could be seen at the end of February.

"The U.S. equity markets are likely to experience a pullback some time in the next 4-6 weeks and that would be pretty consistent with the magnitude of an extreme reading we see in the commodities futures trading corporation data," he told CNBC.

Earnings season will begin in earnest after Monday's closing bell with the unofficial kickoff from aluminum giant Alcoa (AA) . The company received a pre-earnings upgrade from Nomura to "buy" on the continued benefit of downstream acceleration and other primary tailwinds.

AOL (AOL) fell 4.3% after Cowen analysts downgraded the stock to "market perform." The investment firm said the downgrade was a valuation call and that it still sees the internet company's growing asset portfolio as favorable.

Tiffany (TIF) was down 14.2% on negative holiday comparable-store sales. The jewelry retailer also lowered full-year profit guidance to a high of $4.20 a share, down from previous guidance of $4.30 at the high end.

Lululemon (LULU) gained 7.2% after lifting its fourth-quarter earnings guidance to between 71 cents and 73 cents a share. The athletic apparel brand had previously forecast profit of 65 cents to 69 cents a share.

SanDisk (SNDK) plummeted more than 14% after it slashed fourth-quarter revenue guidance to $1.73 billion, down from analysts' consensus of $1.84 billion. Gross margins are expected to slip to 45%, below a previously guided range of 47% to 49%.

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--Written by Keris Alison Lahiff in New York.