Stocks fell on Monday amid fears that a surge in oil prices following an attack in Saudi Arabia could slow down global economic growth.
The Dow Jones Industrial Average slid 142.70 points, or 0.5% to 27,076.82. It was the first decline in nine days for the Dow. The S&P 500 pulled back 0.3% to close at 2,997.96. The Nasdaq Composite also dipped 0.3% to 8,153.54.
Quincy Krosby, chief market strategist at Prudential Financial, said "anything that would suggest this is going be painful for the economy" is going to hurt the stock market.
"It's contained, right now," said Krosby. "That's a function of the U.S. increasing its oil production. We are much less vulnerable to outside influences."
West Texas Intermediate futures jumped more than 14%, notching its biggest one-day gain since 2008. WTI briefly rose more than 15% overnight. The sharp move higher comes after a series of drone strikes on Saturday knocked out about half of Saudi Arabia's daily crude production. Iranian President Hassan Rouhani said Monday that the attack was a reciprocal response to attacks in Yemen.
Saudi Aramco, Saudi Arabia's national oil company, will reportedly try to restore about a third of the country's production by Monday.
General Motors shares fell 4.3% after the United Auto Workers union went on strike after contract talks between the two entities broke down. Higher gasoline prices could also potentially hurt sales.
Airlines JetBlue Airways and United Airlines dropped at least 2.8% each while American Airlines lost 7.3%. Devon Energy skyrocketed more than 12% while Marathon Oil jumped 11.6%. Dow members Exxon Mobil and Chevron rose more than 1% each. The Energy Select Sector SPDR Fund (XLE) had its best day of the year, jumping 3.41%.
President Donald Trump tweeted Sunday before the futures open the U.S. could use oil from its Strategic Petroleum Reserve to keep the market "well-supplied."
However, Energy Secretary Rick Perry told CNBC's "Squawk on the Street" on Monday that it was premature to say whether the use of reserves will be needed.Â
Consistently higher oil prices could lead to increasing fuel prices. This would put more pressure on a global economy that is already coping with a slowing manufacturing sector and stubbornly low growth.
This "is the largest supply shock ever. The world is dependent on strategic reserves right now and you will see SPR draws," said Bob Ryan, chief commodities and energy strategist at BCA Research, in a note. "The market could tighten significantly if the outage is indeed weeks and not days."
Sentiment was also depressed after China's industrial production fell to a new 17½-year low. Production rose 4.4% in August while analysts polled by Reuters expected a gain of 5.2%. The industrial-production slowdown came as China and the U.S. remain embroiled in a trade war.
The major indexes posted solid weekly gains last week and closed in on record highs set in July. Through Friday's close, the Dow and S&P 500 were both about 0.7% below their all-time highs while the Nasdaq was nearly 2% away from its record.
"Market breadth is improving as value stocks begin to catch a bid," said Craig Johnson, chief market technician at Piper Jaffray, in a note. But "at this juncture, we suspect most of the good news is already priced in and the downside risk from any disappointment is high."
—CNBC's Yun Li and Silvia Amaro contributed to this report.