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US stocks ended the session as it started on Monday - in the red - as investors eyed the latest policy announcement from the Federal Reserve due later this week amid expectations of a 25 basis points rate hike.
The Dow Jones Industrial Average was down 2.11% at 23,592.98, the S&P 500 slid 2.08% to 2,545.94, and the Nasdaq 100 lost 2.22% to 6,448.39.
On Friday, stocks on Wall Street closed at their lowest level since April following the release of weak Chinese industrial production and retail sales data for November.
With losses from the opening bell on Monday, the Dow Jones extend its worst December opening in 38 years.
“The Fed decision on Wednesday is another event that could shake things up in the markets,” said Oanda analyst Craig Erlam.
“The central bank has been a key source of volatility in the markets since the beginning of October when Powell’s comments triggered a minor panic and correction in stocks.
“Since then there’s been plenty of speculation about whether the Fed will pare back its expectations for next year, or even hike this week which was almost entirely priced in, so Wednesday will certainly be interesting.”
Meanwhile, Sino-US trade relations were in focus again after the US reportedly said that China’s "unfair competitive practices" were harming foreign companies and workers in a way that violates World Trade Organization rules.
According to Reuters, US trade ambassador Dennis Shea was criticised by Chinese envoy Zhang Xiangchen, who said the Trump administration’s tariffs on steel and aluminum products allowed protectionism under the guise of dubious national security concerns.
In texts seen by the news service, the conversation was had at the start of a closed-door review of US trade policies, held every two years at the WTO.
On the data front, manufacturing sector conditions in the state of New York and northern New Jersey worsened unexpectedly at the end of the year, according to one of the most widely-followed surveys for the sector.
The Federal Reserve Bank of New York's manufacturing sector index fell from a reading of 23.3 for November to 10.9 in December, missing economists' forecast for a reading of -12.4.
Counted in the index are the state of New York, the 11 northernmost counties of New Jersey, Fairfield county in Connecticut, Puerto Rico and the US Virgin Islands.
A key sub-index of new orders dipped from a reading of 20.4 for the month before to 14.5, while another sub-index linked to the prices paid by companies fell from 44.5 to 39.7.
Subindices tracking employment conditions fared better, with one tracking staffing levels jumping from 14.1 to 26.1 although another which measures the length of the average employee workweek dipped by 1.2 points to from the month before to hit 8.0.
Elsewhere, a gauge of US homebuilder confidence fell to its lowest level in more than three years in December, with concerns over housing affordability continuing to weigh on sentiment throughout the sector.
The National Association of Homebuilders revealed that its housing market index had unexpectedly dropped to 56, down from the 60 recorded a month earlier to its weakest reading since May 2015.
"We are hearing from builders that consumer demand exists, but that customers are hesitating to make a purchase because of rising home costs," said NAHB chairman Randy Noel.
In corporate news, WellCare Health Plans shares reversed earlier losses to eke out gains of 0.04%, after the company - which provides government-sponsored managed care services - gave a weaker-than-expected profit outlook for 2019.
It said it expected adjusted earnings per share to come in at between $13.15 and $13.40, versus expectations of $25.69.
Elsewhere, fast-food restaurant chain Jack in the Box was up 2.12% as the company said it was exploring a range of strategic and financing alternatives to maximise shareholder value.
It said potential alternatives could include, among other things, a sale of the company or executing on the company’s previously announced plans to increase its leverage.
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