By Anna Isaac 

The Dow Jones Industrial Average dropped more than 800 points in Monday trading, extending the market's retreat into a fourth consecutive week.

The blue-chip benchmark slid 835 points, or 3%. The S&P 500 fell 2.6%, led by shares of energy and materials companies. The Nasdaq Composite fell 2.3%. The tech-heavy index closed on Friday at its lowest level since Aug. 11.

A closely watched barometer of expected turbulence in U.S. stocks, the Cboe Volatility Index, also jumped Monday to its highest level in almost two weeks.

Some of the largest technology companies, which helped drive the market to record highs over the summer, are now dragging it down. Sentiment has soured as investors assess an array of risks including delays to additional fiscal-stimulus packages, an increasingly heated U.S. election campaigning season, continuing tensions with China, and the threat of renewed lockdowns in many places because of higher coronavirus infections.

Over the weekend, China's Ministry of Commerce laid out penalties for companies and individuals it deems to be "unreliable entities," including potential restrictions on staffing and investment in China, curbs on imports and exports, and fines.

The list is aimed at identifying foreign entities and individuals that could harm Chinese interests. No names have thus far been disclosed. The development is likely to add another stress point to the already strained relations between the U.S. and China, as it signals Beijing may step up retaliatory measures, investors said.

"There's the broader macro risk that this might be China starting to become more combative in its use of sanctions," said Edward Park, deputy chief investment officer at Brooks Macdonald. "That wasn't really on the markets' radar."

Overseas, the pan-continental Stoxx Europe 600 fell 3.2%, led lower by sharp drops in the banking and travel and leisure sectors. The gauge is on track for its lowest closing level since the end of July. Coronavirus cases have been rising across major European economies, leading to speculation that governments will be forced to implement new lockdowns that will curtail business and social activity across the region.

"The worry is definitely that we're going to see restrictions on economies and that's going to have a big negative impact going forward," said Altaf Kassam, head of investment strategy for State Street Global Advisors in Europe. "There's the noise from politicians across Europe on the threat of further lockdown, that we've reached a tipping point on the rate of infections."

Apprehension about additional new restrictions in London sent the FTSE 100 index down 3.1%

Shares of JPMorgan Chase fell 3.8% in early trading after news articles detailed "suspicious activity reports" filed by it and other major banks to U.S. authorities.

Shares in Oracle rose 1.6%. President Trump said he has agreed in concept to a deal under which Chinese-owned video-sharing app TikTok will partner with Oracle and Walmart to become a U.S.-based company, capping negotiations that have stirred debate over national security and the future of the internet. The Commerce Department said it would delay a ban on U.S. downloads and updates for the TikTok app that was set to take effect at 11:59 p.m. Sunday.

Shares in Illumina dropped 6.4%. The maker of machines that sequence genes will pay $7.1 billion in cash and stock for a developer of a long-sought blood test that promises to detect canc er early, people familiar with the matter said.

Nikola's stock plummeted 18.4% after it was reported that founder and Executive Chairman Trevor Milton is stepping down from the electric-truck startup amid allegations from a short seller that he and the company had made false statements to investors.

In Asia, most major stock benchmarks fell by the close of trading. Hong Kong's Hang Seng Index retreated 2.1%, while China's Shanghai Composite ticked down 0.6%. Japan was closed for a holiday.

Brent crude, the international energy benchmark, dropped 2.8% to $40.14 a barrel. Analysts said the drop was triggered by signals that Libya could renew its supply of oil to the global market at a time when demand for oil has dropped. Gold fell 2.3% to $1,917.90 a troy ounce.

In bond markets, the yield on the benchmark 10-year Treasury ticked down to 0.651%, from 0.694% Friday.

Write to Anna Isaac at anna.isaac@wsj.com

 

(END) Dow Jones Newswires

September 21, 2020 10:54 ET (14:54 GMT)

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