Hong Kong's Hang Seng index lost 0.5% to 28,189.75, while in Australia, the S&P ASX 200 declined 1.7% to 6,647.70. The Shanghai Composite index gained 0.3% to 3,047.54. India's Sensex shed 0.2% to 41,463.61. Shares also fell in Taiwan and New Zealand and were flat in Singapore.
Many markets, including those in Tokyo and Seoul, have already ended trading for 2019. Markets will be closed on Wednesday. Strong manufacturing data from China appeared not to do much to counter the prevailing selling sentiment. The official purchasing manager's index for December held steady at 50.2, even with the month before, and the second straight month of expansion on the scale where below 50 indicates a contraction.
In U.S. trading, the benchmark S&P 500 has risen five straight weeks, notching multiple all-time highs along the way. It’s on track to end December with its fourth consecutive monthly gain. Technology, communication services and health care stocks accounted for much of the selling Monday. Retailers and other companies that rely on consumer spending also fell.
Homebuilders fell after a report on pending U.S. home sales in November came in below analysts' expectations. Shares in utilities and real estate sector companies fared the best, ending with only tiny losses, as investors shifted assets to high-dividend stocks and other bond proxies.
“There could be a few big institutions out there that are taking some profits,” said Randy Frederick, vice president of trading & derivatives at Charles Schwab. “Big players can have a bigger influence on the market when the volumes are low.”
The S&P 500 dropped 0.6% to 3,221.29. The Dow Jones Industrial Average fell 0.6% to 28,462.14. The Nasdaq composite lost 0.7%, to 8,945.99, while the Russell 2000 index of smaller company stocks slid 0.3%, to 1,664.15.
Bond prices fell. The yield on the 10-year Treasury note rose to 1.89% from 1.87% late Friday. Despite the downbeat start to the holiday shortened week, the S&P 500 is on pace to finish the year 28.5% higher, which would make it the strongest annual gain for the market since 2013.
A truce in the 17-month U.S.-China trade war and positive signs for the economy have helped keep investors in a buying mood. Fears about a possible recession have also faded since the summer after the Federal Reserve cut interest rates three times. The central bank appears set to keep them low for the near future.
Still, as the market prepares to close out a strong year of gains, uncertainty remains over the final details of a “Phase 1” trade deal between Washington and Beijing, which U.S. officials say will be signed in early January. Details of the agreement have not been disclosed, and it's unclear how much impact it will have if the two sides are unable to resolve their remaining differences.
A couple of potentially market-moving economic reports are scheduled for release this week. Investors will get to mull over new data on U.S. consumer confidence and home prices Tuesday, and the latest snapshot of manufacturing on Friday. Meanwhile, the minutes of the Federal Reserve’s latest interest rate policy meeting are also due out on Friday.
Frederick said the latest data on manufacturing is probably the one that investors should pay attention to the most. “While (manufacturing) only represents about 12% of the economy, it tends to be much more of a leading indicator versus the services sector,” he said. “And it’s been one of the things that’s been causing those out there who think we still might be seeing a recession at some point soon to worry.”
Benchmark U.S. crude oil lost 12 cents to $61.56 per barrel in electronic trading on the New York Mercantile Exchange. Coming off a four-week winning streak, it slipped 4 cents to $61.68 per barrel on Monday. Brent crude, the international standard, gave up 9 cents to $66.58 per barrel.
The dollar fell to 108.68 Japanese yen from 108.89 yen on Monday. The euro was flat at $1.1205.