Month-end rebalancing was one reason cited for the sell-off but investors remained nervous over fears that the U.S. Federal Reserve will start reducing stimulus measures. A jittery Nikkei index in Japan fell by 3.7 percent on Monday, hitting a new six-week low, while worries of a slowdown in China grew after weak factory gate figures for May.
On the economic front, the pace manufacturing activity ticked slightly higher in May to 52.3 from 52.1 in April, according to financial data firm Markit's final Manufacturing Purchasing Managers Index. A reading above 50 indicates expansion.
The ISM manufacturing report for May is expected to be released at 10 am ET with analysts looking for a reading of 50.7, unchanged from April. In addition, construction spending for April will also be released at the same time. Economists surveyed by Reuters expect to see an increase of 0.8 percent, up from a 1.7 percent decline in March.
Investors will also be closely watching the monthly government employment report at the end of the week. The report is expected to show that non-farm payrolls climbed 165,000 in May, according to the latest Reuters poll, with the unemployment rate unchanged at 7.5 percent.
Japanese stocks continued to get pounded, with the Nikkei tumbling another 3.7 percent, its third-largest drop of the year.
In Europe, shares opened the week in the red but climbed off session lows with better-than-expected manufacturing data from key euro zone countries.
(Read More: Europe Off Lows on Factory Data)
Health care stocks could move on news that nearly two-thirds of Americans who currently lack health insurance don't know yet if they will purchase that coverage by the Jan. 1 deadline, according to a fresh report on Monday.
The same report, released by InsuranceQuotes.com, said less than half of those in the survey think they'll get better health care after Obamacare takes full effect.
Meanwhile Wells Fargo's CEO John Stumpf warned the Federal Reserve against forcing banks to hold more long-term debt, according to the Financial Times. He said the Fed was giving mixed messages on debt and added that Wells Fargo should not be punished for the fact that it is largely funded by deposits.
Cracker Barrel shares rose after the restaurant chain topped earnings expectations and increased its dividend.