Stocks extended deep losses by late morning Monday as the high-momentum tech sector sold off on global worries.
The S&P 500 fell 2.5% on Monday, the Dow Jones Industrial Average slid 2.6%, and the Nasdaq tumbled 3%.
High-momentum tech stocks, typically the hardest hit during selloffs, were the worst performers on markets Monday. Amazon (AMZN - Get Report) , Apple (AAPL - Get Report) , Microsoft (MSFT - Get Report) , Alphabet (GOOGL - Get Report) and Facebook (FB - Get Report) were all sharply lower, while the Technology Select Sector ETF (XLK - Get Report) fell 2.6%.
Netflix (NFLX - Get Report) was the biggest laggard on the S&P 500, falling more than 7%, after Baird Equity Research downgraded to 'neutral.' Analysts said they expect to see another month of weak U.S. subscriber additions, while international strength has already been priced in.
Global markets slumped on weak Chinese manufacturing data and amid geopolitical tensions between Saudi Arabia and Iran.
"Today's turbulence is only the beginning," said Nigel Green, CEO and founder of financial consultancy deVere Group. "There's a cocktail of uncertainty with the main ingredients including China's economic woes, higher interest rates in the U.S., historically low oil prices ... and increasing tensions in the Middle East."
China's Shanghai Composite plummeted 7% before triggering a trading halt after manufacturing activity contracted for the 10th straight month. The official manufacturing PMI came in at 49.7, while Caixin manufacturing PMI fell to 48.2. A reading below 50 indicates contraction. China's economic growth came under scrutiny in 2015 as data indicated a steeper slowdown than feared.
Global markets were also lower after Saudi Arabia severed diplomatic relations with Iran on Sunday. Protesters torched a Saudi Arabian Embassy in Tehran on Saturday in response to Saudi Arabia's execution of 47 prisoners, including Shiite cleric Nimr Baqr al-Nimr.
Tensions pushed the price of crude oil higher on potential supply disruptions between the two. West Texas Intermediate crude oil added 1.6% to $37.62 a barrel. Crude closed out 2015 down more than 30%.
U.S. manufacturing activity in December hit its lowest level since October 2012, according to the latest data from Markit. The latest PMI Manufacturing Index fell to 51.2, down from 52.8 in November. The 50-level indicates the line between expansion and contraction.
A separate survey on the manufacturing sector showed activity in contraction. Manufacturing fell to 48.2 in December, its second straight month in contraction, according to the ISM Manufacturing Index. Economists had expected the measure to climb to 49.2.
Construction spending unexpectedly declined in November, the first and biggest drop in 17 months. Spending in the U.S. fell 0.4% in November after a 0.3% increase a month earlier, according to the Commerce Department.
Shire (SHPG) is in advanced talks to acquire Baxalta (BXLT) for around $32 billion in cash and stock, or around $46.50 to $48 a share, sources told Bloomberg. A deal could be announced as soon as this week after final details are negotiated. A combined company would generate $20 billion in sales by 2020.
Micron Technology (MU - Get Report) fell 2% after President Mark Adams submitted his resignation for personal health reasons. Adams will step down Feb. 1. Shares have been under pressure recently as the semiconductor manufacturer suffers weaker demand for PC chips.
General Motors (GM - Get Report) announced plans to contribute $500 million to ride-sharing company Lyft in its latest $1 billion round of fundraising. The automaker will receive a seat on the board and access to the company's software. GM models will also become the official preferred vehicles for drivers.
Nokia (NOK - Get Report) climbed more than 2% after officially gaining control of Alcatel-Lucent (ALU) through an all-share deal. Nokia will hold 79% of Alcatel shares and expects to become a fully-functional combined group by the middle of the month.
American Express (AXP - Get Report) and Bank of America (BAC - Get Report) were under pressure after Fidelity Investments dropped the two as credit card partners after 12 years. Visa (V - Get Report) and U.S. Bancorp (USB - Get Report) will take over as the network and issuer of the Fidelity card.
Tesla (TSLA - Get Report) shares tumbled more than 4% on Monday after the automaker said it delivered 17,400 cars in the fourth quarter, up from 11,603 in the previous quarter. The company said it delivered 50,580 Model S sedans and Model X sport utility vehicles in 2015, falling at the low end of previous guidance.
Disney's (DIS - Get Report) Star Wars: The Force Awakens is set to become the highest-grossing film of all time in North American theaters this week. Avatar had previously held the title. The domestic gross for the film currently stands at $740.3 million, while globally it has generated $1.5 billion.