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[NEW YORK] US stock indexes lost more than one per cent on Monday, their biggest decline in six weeks, as investors braced for an interest-rate hike and fretted about weak Chinese trade data.
Nine of the 10 major S&P sectors were lower, led by consumer discretionary and energy stocks. The Dow Jones industrial average slipped back into negative territory for the year, with only two of its 30 components higher on the day.
US companies face the prospect of higher borrowing costs if the Federal Reserve raises interest rates next month, as is widely expected after Friday's strong jobs report.
Investors also focused on renewed fears of a slowdown in China, a key market for many companies, ahead of the crucial holiday shopping season.
China, one of the United States' biggest trade partners, ended October with a record high trade surplus, with both exports and imports falling.
US stocks have ended higher for six weeks in a row, buoyed by better-than-expected corporate results and signs of a strengthening domestic economy. "There are short-term myopic concerns about a Fed rate hike," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma, which has about US$50 million in assets under management.
"Bond and stock prices will decline when the Fed makes that first announcement, but ultimately, stocks will thrive because it will prove the US economy is healthy enough to stand on its own," Mr Dollarhide said.
The Dow Jones industrial average fell 1.11 per cent to 17,711.14 and the S&P 500 lost 1.11 per cent to 2,075.82 points. The Nasdaq Composite dropped 1.23 per cent to 5,083.60.
The CBOE Volatility index, known Wall Street's fear gauge, rose 15 per cent to 16.50, the most in a single session in six weeks.
The consumer discretionary sector was the worst-hit among the S&P sectors, falling 1.5 per cent, weighed down by Priceline.
Priceline slumped 9.8 per cent after a weak fourth-quarter profit forecast.
Only two Dow components rose. Walt Disney gained 0.60 per cent, while DuPont added 0.45 per cent after the chemical and seeds producer said interim Chief Executive Ed Breen will keep his job permanently.
A fall in oil prices led to a 1.3 per cent decline in the energy sector.
Dean Foods rose 4.6 per cent after reporting a better-than-expected quarterly profit.
Plum Creek Timber soared 17.1 per cent after Weyerhaeuser said it would buy the company to create a US$23 billion timber company. Weyerhaeuser fell 2.7 per cent.
Declining issues outnumbered advancing ones on the NYSE by 2,500 to 552. On the Nasdaq, 1,944 issues fell and 819 advanced.
The S&P 500 index showed 3 new 52-week highs and 10 lows, while the Nasdaq recorded 93 new highs and 53 lows.