By Anora Mahmudova and Sara Sjolin, MarketWatch McDonald's skids after disappointing November sales figures

NEW YORK (MarketWatch) -- U.S. stocks came off session lows but were still on track for the steepest declines in nearly seven weeks on Monday as a brutal selloff among energy companies, which closely tracked oil's continued price slide, dragged down the key benchmarks.

Downbeat economic reports form China, Japan and Europe also dented sentiment. Nervousness among investors was evident from a jump in 10-year Treasury yields, rising 5 basis points and a 17% jump in the CBOE Vix index, commonly knows as Wall Street's fear gauge.

Losses in the S&P 500 (SPX) were led by energy companies, as the sector dropped more than 3%. Materials, industrials and technology sector stocks were also selling off, while defensive sectors such as utilities, health care and telecoms were higher.

The Dow Jones Industrial Average (DJI) dropped as much as 150 points at session lows, but was trading 0.6% lower, with McDonald's Corp.(MCD) taking a bite out of the blue-chip stock index following disappointing sales. Oil giants ExxonMobil and Chevron also weighed on the index.

The tech-heavy Nasdaq Composite (RIXF) reversed earlier gains, with declines outpacing other benchmarks. The heaviest-weighted component of the index, Apple Inc. (AAPL) fell more than 2%.

The broader market moves are playing out amid the back drop of crude oil's continued slide. Crude oil (CLF5) fell nearly 4% on Monday.

Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research, downplayed Monday's action, pointing out that increased buying in late afternoon session after a selloff in the morning usually indicates a short-term bullish view of institutional investors.

"The move on the S&P 500 is still less than 1% and selling on Wall Street seems to be strictly contained to industries with close ties to oil prices. While it is true that the energy companies are hit hard today, lower oil prices ultimately benefit consumers and other business that use oil, which are a much bigger part of the S&P 500," Frederick said.

Brian Fenske, head of sales trading at Investment Technology Group, brokerage and technology firm, struck a similar chord, saying a lack of clarity about crude oil prices were dictating trading strategy on Monday.

"There is a lot of uncertainty when it comes to crude oil prices, which made the whole energy sector difficult to invest in, which is why we are seeing so much selling in those companies," Fenske said.

Also read: 5 global problems that cheaper oil may fuel

Concerns about the health of the global economy resurfaced on Monday after disappointing Chinese trade numbers and data showing Japan's economy contracted more than initially forecast in the third quarter. Figures from Germany showed industrial production expanded less than expected in October.

Also read: How strong dollar may hurt the global economy

The euro (EURUSD) traded around a 28-month low after Ewald Nowotny, member of the European Central Bank's Governing Council, said the currency union is the weak spot in the world economy. European stock markets were also mostly lower.

Movers and shakers: Denbury Resources fell 12%, making it the worst performer on the S&P 500. Energy companies were among the top ten decliners on the S&P 500, sliding about 7% on average. The Energy Select Sector SPDR Fund ETF (XLE) fell 4%.

Biotech stocks were one of the bright spots on Wall Street. Cubist Pharmaceuticals Inc.(CBST) soared after drug giant Merck & Co. Inc. (MRK) agreed to buy the smaller antibiotics maker for $8.4 billion. Merck shares were unchanged.

Shares of Celgene Corp (CELG) jumped on news that the biotech company extended its partnership with Agios to work on a cancer drug.

(Read more in today's Movers & Shakers column: http://www.marketwatch.com/story/vail-resorts-hr-block-earnings-in-focus-2014-12-07.)

Other markets: Asian markets got their first chance to react to the solid U.S. jobs report issued Friday, sending indexes in Japan and China higher. China's Shanghai Composite closed above 3,000 for the first time since 2011.

In metals, gold prices rose 1.2% while the dollar (DXY) slipped against the yen after the data showed the Japan's GDP shran more than previously estimated.

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