Stocks wobbled and oil tumbled Monday, as markets struggled to regain their footing following last week's bruising start to the year.
The Dow Jones Industrial Average slipped 9.8 points, or less than 0.1%, to 16337 in midday trading, pulling back from gains of as much as 115 points earlier in the session.
Oil prices in the U.S. dropped below $ 32 a barrel for the first time since 2003, pummeled by a stronger dollar and worries over Chinese demand. The slide battered shares of energy companies, with S&P 500 energy stocks down 1.8%.
Those moves follow a steep selloff in stocks last week that marked the worst start of the year on record for major U.S. indexes. The Dow dropped 6.2% last week, while China's Shanghai Composite slumped 10%.
On Monday, many investors are holding off on placing big trades ahead of fourth-quarter earnings reports from many U.S. companies due in the weeks ahead, traders said.
"If you bought the dip in the last month you're hurting," said Tom Carter, managing director at JonesTrading. "In two or three weeks we will be determining the new equilibrium, but not now."
The fourth-quarter earnings season unofficially kicks off Monday with a report from aluminum maker Alcoa Inc., due after the closing bell. Analysts expect S&P 500 companies to report a 5.5% decline in quarterly profits, according to FactSet, as they were weighed down by steep earnings declines in the energy and materials sectors.
The S&P 500 was fell 0.3%, while the Nasdaq Composite dropped 0.6%.
Shares of Fitbit Inc. tumbled 13%, extending a slide last week and dragging the maker of wearable fitness-tracking devices below its $ 20 IPO price.
Mining stocks fell as coal company Arch Coal filed for chapter 11 protection. Freeport-McMoran lost 20%, Consol Energy fell 12%, while Peabody Energy declined 20%.
The Stoxx Europe 600 lost 0.3%, reversing earlier gains. Shares of Shire PLC fell 8.2% after the Dublin-based pharmaceutical company agreed to buy cancer-drug maker Baxalta Inc. for $ 32 billion, the latest tie-up in a rapidly consolidating health-care sector.
The Shanghai Composite Index fell 5.3% amid fears that Chinese authorities are unable to stem the turmoil in the Asian giant's financial markets and a slowdown in the broader economy.
Some investors said China has posted little new information about its economy that would justify the market's reaction.
"China's stock market doesn't have huge ramifications for most international investors," said David Stubbs, global market strategist at J.P. Morgan Asset Management, which manages roughly $ 1.7 trillion in assets.
Despite last week's sharp losses, Mr. Stubbs said he remains invested in stocks in the U.S. and Europe where recent economic data has been mostly positive.
Amid the jitters, Hong Kong's Hang Seng Index declined 2.8% Monday, hitting its lowest level in more than two years. Australia's S&P/ASX 200 lost 1.2%. Japan's Nikkei Stock Average was closed for a holiday.
In other markets, the euro slipped 0.5% against the dollar to $ 1.0878. South Africa's rand hit record lows.
Gold rose 0.1% to $ 1,098.80 a troy ounce. Treasury prices fell, pushing the 10-year yield up to 2.166% from 2.131% on Friday.
"What China gave, it's now taking away from emerging markets and commodities," said Yossi Dayan, head of markets at BCS, an independent broker on the Russian exchange. "All the supply built to feed Chinese demand is not finding a home," he said.
Dirk Thiels, head of investment strategy at KBC Asset Management, said the nervousness about China's economy is only adding to the underlying fragility of financial markets at the start of the year.
"People are worried this economic growth we've seen strongly in Europe and in the U.S. was built on very cheap money, and now that things are changing, [as the Federal Reserve raises rates] that might not last for a long time," he said.
—Chao Deng and Tommy Stubbington contributed to this article.
Write to Dan Strumpf at daniel.strumpf@wsj.com and Riva Gold at riva.gold@wsj.com
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