With no major reports issued Monday, investors fell back on inflation worries as oil peaked to a record $108.21 in midday, before settling at $107.95 per barrel.

At the close Monday, the Dow Jones industrial average had dropped 153.54 points to 11,740.15 points, off 1.29 percent. The Standard & Poor's index was down 19.98 points to 1,273.39 points, off 1.54 percent. The Nasdaq composite index of tech-dominated stock slid 1.95 percent to 2,169.34 points, down 43.15 points.

The 10-year U.S. Treasury note advanced 22/32 to yield 3.459 percent.

The euro traded at $1.5348 from $1.5378 Friday, while the dollar traded at 101.74 from 102.76 yen Friday.

In Tokyo, the Nikkei index dropped 250.67 points Monday to 12,532.13, off 0.2 percent.

In London, the FTSE 100 index dropped 56.00 points Monday to 5,643.90 points, down 0.98 percent.