The S&P 500 index ends a four-session winning streak.
Major U.S. indexes closed with collective losses on Monday, pressured by rising Treasury yields as investors anxiously awaited the Federal Reserve's monetary policy update due in two days.
Yields on 10-year Treasury bonds also rose to their highest level in two weeks shortly after a powerful earthquake struck off the coast of Japan.
Hopes for an interest rate cut in December were boosted by last week's data showing a moderate rise in consumer spending towards the end of the third quarter.
However, investors are still waiting for clues about future policy moves from the US Federal Reserve, which is expected to be the most divided in years.
Traders now estimate the probability of a 25 basis point interest rate cut on Wednesday at approximately 89%, according to the FedWatch tool.
Performance of major US indices
The Dow Jones index fell 0.45%, or 215 points, on Monday, giving up its highest level in three weeks.
Meanwhile, the S&P 500 index fell 0.3%, ending a four-session winning streak.
The Nasdaq Composite Index also fell by 0.1%, giving up its highest level in nearly a month.
Later this week, the focus will shift to technology sector valuations, with earnings reports from Oracle and Broadcom, where investors have been concerned about debt-financed AI spending.
Tesla stock
Tesla's stock fell 3.4% on Monday, dropping from its highest level in a month, and the company lost $51 billion in market value in a single day.
These losses came after Morgan Stanley downgraded the company's stock credit rating to equal weighted instead of overweight with limited upside potential.
The bank estimates that car turnover for 2026 will be 13% lower than the consensus forecast, reflecting a more cautious view of the electric vehicle sector.
Netflix shares
Netflix shares fell more than 3% on Monday, marking their fourth consecutive daily loss and closing at their lowest level in nearly seven months.
These losses came after Paramount launched a hostile $108.4 billion bid on Monday to acquire Warner Bros., in a last-ditch effort to outmaneuver Netflix and create a massive media platform that would challenge the streaming giant's dominance.
This presentation led to a 4% rise in Warner Bros. shares to their highest level in nearly four years, and Paramount shares jumped 9% after the presentation.
