Nasdaq falls 1% as tech shares drop

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Traders work on the floor of the New York Stock Exchange on July 12, 2018 in New York City.

Trade worries also rattled investors on Monday after Reuters reported that Canada, the European Union, Japan, Mexico and South Korea will meet next week to discuss a response to threats made by President Donald Trump about slapping tariffs on U.S. auto imports.

Meanwhile, Caterpillar said in its second-quarter earnings report that recently imposed tariffs will shave off between $100 million and $200 million from its bottom line in the second half. The company also reported better-than-expected earnings and raised its full-year outlook, however.

“I think the market is headed for jittery times,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “Those tariffs are showing up in earnings reports and eventually will hit the consumer. Once that happens, consumer sentiment will dampen.”

Tyson Foods also lowered its fiscal-year earnings forecast, citing uncertainty around trade policies and tariffs. Shares of Tyson Foods dropped more than 5 percent.

Wall Street looked ahead to the Federal Reserve’s latest monetary policy meeting, which is scheduled to start Tuesday. Market expectations for a rate hike are just 3 percent, according to the CME Group’s FedWatch tool, but investors will look for clues on the central bank’s path toward normalizing policy.

Treasury yields rose ahead of the meeting on Monday, with the 10-year yield hitting 2.99 percent, its highest level since June 13. Bank shares got a boost from the higher yields. J.P. Morgan Chase, Citigroup and Bank of America, all rose more than 1 percent, while Morgan Stanley gained 0.8 percent.