The Dow Jones Industrial Average sank 509.72 points, or 1.84 percent, to 27,147.70. The S&P 500 fell 38.41 points, or 1.16 percent, to 3,281.06. The Nasdaq Composite Index dipped 14.48 points, or 0.13 percent, to 10,778.80.
Ten of the 11 sectors under S&P 500 posted losses led by materials, industrials and energy sectors. Still, the technology sector managed to grow 0.76 percent thanks to investors' return to the tech stocks amid a risk-off drive.
U.S.-listed Chinese companies saw mixed performance, with five of the top 10 stocks by weight in the S&P U.S. Listed China 50 index ending the day on a downbeat note and another five on the rise.
The threat of rising coronavirus infection cases and possible reintroduction of nationwide lockdown in the United Kingdom sank European stock markets on Monday and spilled over to the U.S. market.
Concerns of a resurgence in global COVID-19 cases weighed on sentiment, while political tensions in Washington D.C. also contributed to the downbeat mood, said Wells Fargo Advisors on closing of the session.
"Negotiations over additional fiscal stimulus are expected to be further complicated after the passing of Justice Ruth Bader Ginsburg created an unexpected vacancy on the U.S. Supreme Court," said Wells Fargo Advisors.
"Both sides have so far failed to reach an agreement. But any progress toward a bill could lead to a reduction in U.S. economic uncertainty," UBS Global Wealth Management's Chief Investment Officer Mark Haefele said in a note on Monday.
Moreover, the Chicago Fed National Activity Index only read at 0.79 in August, lower than 2.54 in July and market expectation of 1.88, which reflects moderation of U.S. economic recovery.
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