US stocks were poised for their worst monthly drop in more than three years on worries about the health of China's economy and the timing of a US interest rate hike.
All three major indexes slipped more than 1% after weekend comments from Federal Reserve Vice Chairman Stanley Fischer appeared to keep the door open for a rate hike in September.
The No. 2 Fed official said US inflation would likely rebound as pressure from the dollar fades, allowing the Fed to raise interest rates gradually.
Fischer's remarks at the global central banking conference in Jackson Hole, Wyoming suggest the Fed could look beyond a week of stock market turmoil brought on by persistent fears that China's economy is faltering.
Investors will be keeping a sharp eye on economic data again this week, especially the monthly jobs report on Friday, the last one before the Fed meets in mid-Setpember.
The US central bank has said it will raise rates only when it sees a sustained recovery in the economy.
While the jobs market has improved steadily, inflation has remained below the central bank's 2% target for more than three years.
A decade of near-zero interest rates has helped the US stock market stage a spectacular bull-run since the financial crisis.
But fears about the health of the Chinese economy buffeted global stock markets this month and pushed prices of oil and other commodities lower.
Wall Street closed flat on Friday after a tumultuous week in which the Dow slumped more than 1,000 points at one point last Monday.
The market subsequently rallied, posting its biggest two-day gain since the financial crisis.
