By Georgi Kantchev 

U.S. stocks kicked off the week under pressure as investors awaited a key Federal Reserve meeting amid mounting signs of slowing economic growth around the world.

The Dow Jones Industrial Average slumped 222 points, or 1%, to 23877. The blue-chip index tumbled nearly 500 points Friday and the three major U.S. indexes fell into correction territory, or a drop of at least 10% from a recent high, for the first time since March 2016.

The S&P 500 declined 1% and the Nasdaq Composite also traded lower, falling 1.3%. U.S. stocks are off to their worst start to a December since 1980.

All 11 sectors in the S&P 500 were lower, led by declines in consumer-discretionary and health-care stocks. Both groups lost at least 1.5%.

The Federal Reserve will conclude its final policy meeting of the year Wednesday and while analysts widely expect the central bank to raise short-term interest rates, the focus will be on the Fed's outlook for next year.

President Donald Trump tweeted Monday that it was "incredible" that central bank policy members were considering raising borrowing costs again, continuing his public campaign against tighter monetary policy.

Softening economic data and falling oil prices have led many traders to price in a more gradual course of rate increases for 2019. Remarks in November by Fed Chairman Jerome Powell, who said rates looked like they were "just below" neutral, a level that would neither speed nor hamper economic growth, are also guiding expectations.

The uncertainty comes amid a rocky stretch for financial markets, as trade frictions, worries about slowing global growth and geopolitical tensions have curbed risk appetite among investors in recent months.

"People are trying to put a price on stocks but there's lack of clarity out there about pretty much everything -- the Fed, trade, China's economy, Brexit," said Thomas Hainlin, global investment strategist at U.S. Bank Wealth Management. "If the Fed gives a clear indication for next year's moves, that would clear some of the uncertainty."

The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was down 0.2%. The 10-year U.S. Treasury yield fell to 2.868% from 2.891% on Friday. Yields move inversely to prices.

In Monday's trading, Amazon.com and Best Buy were among the biggest decliners in the consumer-discretionary group, losing 3.4% and 3.2%, respectively. Bank of America Merrill Lynch downgraded Best Buy to underperform from neutral, lowering its price target to $50 a share from $70.

Technology shares were also lower, with Google parent Alphabet, Netflix and Facebook each down more than 1%.

Health-care stocks came under pressure after a federal judge in Texas ruled Friday that the Affordable Care Act was unconstitutional. Shares of HCA Healthcare shed 4.4% while Humana and UnitedHealth Group both fell more than 2%.

Johnson & Johnson, which lost $39.8 billion in market value Friday, continued to slide after Reuters reported last week that the company knew for years that its baby powder sometimes contained asbestos. J&J denied the claim. Shares were down 2% Monday.

Bank stocks also fell. Goldman Sachs dropped 2.6% after Malaysian authorities filed criminal charges Monday against banking units and a former partner of the firm in connection with the 1MDB financial scandal, the country's attorney general said.

Elsewhere, the Stoxx Europe 600 fell 0.8%. Recent data indicating that economies in Europe and China are slowing has sparked worries that the malaise could spread to the U.S., despite relatively steady readings on the American economy.

"The U.S. economy is slowing but still doing fine," Mr. Hainlin said. "It's like a runner going from a fast speed to a more normal pace -- he's still moving forward."

Investors were also bracing for the latest moves on Brexit. U.K. Prime Minister Theresa May last week vowed to press on with efforts to win assurances from European Union leaders on sweetening the Brexit deal, but EU officials largely stood pat.

"In the aftermath of May's latest rebuff in Brussels, uncertainty will be heightened and the markets will be fearful of an increasingly damaging effect on the real economy," analysts at Société Générale said in a note to clients.

In Asia, Japan's Nikkei finished 0.6% higher while Hong Kong's Hang Seng was flat.

--Jessica Menton contributed to this article.

Write to Georgi Kantchev at georgi.kantchev@wsj.com

(END) Dow Jones Newswires

December 17, 2018 10:26 ET (15:26 GMT)

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