U.S. stocks fell sharply on Monday, with benchmarks retreating from records and the energy sector slammed as the price of crude fell below $63 a barrel for the first time since July 2009.
"We're seeing a last gasp pullback in energy, and that 13 percent of the S&P 500 that is represented by energy companies," said Art Hogan, chief market strategist at Wunderlich Securities.
"Over the near term, it's a big help for the consumer, who haven't had any income or wage growth in a while. If it trades below $60 for months, I would think that would be problematic," Bruce Bittles, chief investment strategist at RW Baird & Co., said of crude's ongoing decline.
Crude for January delivery fell $2.79, or 4.2 percent, to settle at $63.05 a barrel on the New York Mercantile Exchange.
McDonald's fell after the fast-food chain reported global comparable sales declined 2.2 percent last month. Merck & Co. said it would acquire Cubist Pharmaceuticals in a deal valued at $9.5 billion.
Apple fell sharply, with the consumer-technology maker leading the technology sector lower.
Chinese overseas shipments climbed 4.7 percent from a year earlier in November, the customs administration said.
Separately, Japan's economy contracted more than anticipated in the third quarter.
Major U.S. Indexes
After a 154-point drop, the Dow Jones Industrial Average shed 106.31 points, or 0.6 percent, to 17,852.48, with McDonald's and Chevron leading blue-chip losses that extended to 19 of 30 components.
The fell 15.06 points, or 0.7 percent, to 2,060.44, with energy and materials falling hardest and utilities and financials faring best among its 10 major industry groups.
The Nasdaq shed 40.06 points, or 0.8 percent, to 4,740.69.
For every share rising, more than two dropped on the New York Stock Exchange, where nearly 814 million shares traded. Composite volume cleared 3.8 billion.
The U.S. dollar declined against the currencies of major U.S. trading partners; the yield on the 10-year Treasury note fell 5 basis points to 2.2579 percent.
Gold futures for February delivery rose $4.50, or 0.4 percent, to $1,194.90 an ounce on the New York Mercantile Exchange.
On Friday, U.S. stocks rose, lifting the Dow and S&P 500 into uncharted terrain and posting a seventh week of gains, as investors embraced a stronger-than-forecast November payrolls report as backing the view the economy can handle rate hikes by the Federal Reserve in 2015.
Read MoreS&P, Dow end at record highs on upbeat jobs report
"There is certainly a transition going on, being that for the past five years, this has been a Fed-driven market, and now the U.S. economy has the chance to gain more traction, and increase top and bottom-line growth for companies," said Bittles.
Coming Up This Week:
Tuesday
Earnings: AutoZone, Krispy Kreme, Burlington Stores, HD Supply
7:30 a.m.: NFIB survey
10:00 a.m.: Wholesale trade
10:00 a.m.: JOLTs
1:00 p.m.: $25 billion 3-year note auction
Wednesday
Earnings: Costco, Hovnanian, Toll Brothers, Lands' End, Vera Bradley, Men's Wearhouse
1:00 p.m.: $21 billion 10-year note auction
2:00 p.m.: Federal budget
Thursday
Earnings: Lululemon Athletica, Ciena, Adobe Systems, Quiksilver, Esterline Tech
8:30 a.m.: Initial claims
8:30 a.m.: Retail sales
8:30 a.m.: Import prices
10:00 a.m.: Business inventories
1:00 p.m.: $13 billion 30-year bond auction
Friday
8:30 a.m.: PPI
9:55 a.m.: Consumer sentiment
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