By Anora Mahmudova and Victor Reklaitis, MarketWatch

The global equity selloff sparked by a Chinese stock-market rout spread to Wall Street on Monday, propelling U.S. stock indexes to their fifth consecutive session of losses.

Disappointing earnings over the past week and lackluster economic data has put pressure on the main equities, prompting investors to sell risky assets such as stocks and commodities while piling into havens such as Treasurys and gold.

The Nasdaq Composite , was hit the hardest, falling 48.85 points, or 1%, to 5,039.78. The tech-heavy index is now 3.4% below its all-time high reached a weak ago.

The Dow Jones Industrial Average fell 127.94 points, or 0.7%, to 17,440.59, with 25 of its 30 members finishing lower.

The S&P 500 dropped 12 points, or 0.6%, lower at 2,067.64, with nine of its 10 main sectors finishing lower. Energy and materials stocks led the losses, while utilities were the lone bright spot, finishing 1.3% higher.

A dramatic slide overnight in the Shanghai Composite , which closed 8.5% lower for its biggest one-day slide since February 2007 (http://www.marketwatch.com/story/shanghai-plunges-8-on-worries-beijing-is-ratcheting-down-inflows-2015-07-27), was the main reason for the market's drop. China watchers note the rout in Shanghai has prompted Beijing to try to reassure investors again (http://www.marketwatch.com/story/what-china-watchers-are-saying-about-shanghais-ugly-selloff-2015-07-27).

European stocks also sold off, with the main benchmark, the Stoxx Europe 600, dropping 2.2%.

Market reaction to better-than-expected durable-goods orders also was negative, as investors continued to view each data-point as a factor in the Federal Reserve's decision about the timing and pace of interest rate hikes.

What strategists are saying: Brian Fenske, head of sales trading at ITG, said a plunge of that size in any market will erode investor confidence, referring to China.

"When any index falls 8.5%, it means there are many individual stocks that are down 20%-30%. And this morning, investors are concerned that a drop in China's stock market may spill over to consumer confidence there," Fenske said.

Apart from macro headlines, investors were worried about technical levels on the main indexes, as the S&P 500 closed within a few points of a key technical level of 200-day moving average at 2,064. The Russell 2000 closed just at the 200-day moving average on Monday, after falling 0.9 to 1,214.71.

Albert Brenner, director of asset allocation strategy at People's United Wealth Management, noted that when valuations are high, stocks are sensitive to news and events, regardless of whether they are relevant to fundamentals or not.

"While the 8.5% drop in China's stock market does not have too much importance to companies earnings, it was not expected, therefore investors reacted. But more importantly, it's the changes in the commodity market that are driving recent weakness in markets," Brenner said.

Economic reports: June durable-goods orders rose 3.4%, exceeding analysts' expectations. However, business investments and shipments remained soft.

Investors this week are waiting for clues on the timing of a rate rise from the closely watched Federal Reserve meeting on Tuesday and Wednesday. See: MarketWatch's Fed meeting preview (http://www.marketwatch.com/story/fed-seen-staying-mum-but-second-quarter-gdp-report-pencils-out-as-game-changer-2015-07-26)

Movers & Shakers: Mylan NV (MYL) shares tumbled 14.5% action after Teva Pharmaceuticals Industries Ltd. (TEVA) said it has withdrawn its buyout offer for the maker of generic drugs. Teva announced Monday that it is instead planning to buy Allergan PLC's (AGN) generics business for $40.5 billion (http://www.marketwatch.com/story/teva-buying-allergan-generics-for-405-billion-drops-mylan-bid-2015-07-27). Teva shares soared 16%.

Read more in the Movers & Shakers column (http://www.marketwatch.com/story/norfolk-southern-eastman-chemical-hartford-earnings-in-focus-2015-07-27)

Other markets: U.S. Treasurys rallied, sending the yields on the 10-year note down 4 basis points to 2.22%. Yields move inversely to prices.

Gold futures gained ground (http://www.marketwatch.com/story/gold-retakes-1100-as-dollar-slides-2015-07-27), rising 1% to settle at $1,096.40 an ounce, benefiting from haven demand as stocks mostly retreated world-wide. Crude prices fell (http://www.marketwatch.com/story/oil-under-48-a-barrel-but-analysts-see-a-bottom-2015-07-27) 1.6% to settle at $47.39 a barrel and the dollar was lower against its major rivals (http://www.marketwatch.com/story/dollar-drops-versus-yen-euro-ahead-of-fed-meeting-2015-07-27).

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