WASHINGTON (dpa-AFX) - Stocks showed a strong move to the upside in early trading on Monday but saw a significant downturn over the course of the session. The major averages pulled back well off their early highs, with the Nasdaq and S&P 500 sliding into negative territory.
The tech-heavy Nasdaq slumped 272.68 points or 1.1 percent to 25,164.32, while the S&P 500 fell 38.67 points or 0.5 percent to 7,541.40.
The Nasdaq and S&P 500 extended the sharp pullback seen over last Thursday and Friday's sessions, hitting their lowest closing levels in three months.
Meanwhile, the narrower Dow ended the day up 213.67 points or 0.4 percent at 51,983.98 amid strong gains by Sherwin-Williams (SHW), Home Depot (HD) and Walmart (WMT).
The significant downturn by the Nasdaq came amid continued weakness among tech stocks, as worries about the outlook for the artificial intelligence weighed on the sector once again.
Computer hardware stocks turned in some of the tech sector's worst performances, with the NYSE Arca Computer Hardware Index plunging by 5.5 percent to a three-month closing low.
Semiconductor, networking and software stocks also showed substantial moves to the downside over the course of the trading session.
Outside of the tech sector, energy stocks moved sharply lower along with the price of crude oil, dragging the Philadelphia Oil Service Index and the NYSE Arca Oil Index down by 5.1 percent and 4.3 percent, respectively.
U.S. crude oil futures have plummeted by nearly 8 percent, tumbling well below $100 a barrel amid renewed optimism about a potential diplomatic solution to the ongoing conflict in the Middle East.
Over the weekend, Secretary of State Marco Rubio said President Donald Trump would like to resolve the U.S.-Iran war 'diplomatically.'
'What the president expresses to you is incredible confidence that if we needed to do something militarily, we would have the ability to do it, and we really we have everything we need to be successful,' Rubio said. 'But we would prefer to do it peacefully.'
Ongoing discussions involving Iranian officials and Qatari mediators have also raised hopes of possible breakthrough that could ease supply concerns and improve the outlook for global energy markets.
The steep drop in crude oil prices contributed to the early strength on Wall Street along with bargain hunting following the sharp pullback seen late last week.
In U.S. economic news, the Institute for Supply Management released a report showing its reading on U.S. manufacturing activity increased by more than expected in the month of October.
The ISM said its manufacturing PMI rose to 55.5 in October after edging down to 54.5 in September, with a reading above 50 indicating growth. Economists had expected the index to inch up to 54.6.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan's Nikkei 225 Index fell by 0.3 percent, while China's Shanghai Composite Index jumped by 1.1 percent.
Meanwhile, the major European markets all moved to the upside on the day. While the French CAC 40 Index shot up by 1 percent, the German DAX Index climbed by 0.6 percent and the U.K.'s FTSE 100 Index rose by 0.3 percent.
In the bond market, treasuries extended the notable upward move see over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell 3.5 basis points to 4.894 percent.
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