Wall Street drops with energy shares, economic worries

Stocks fell on Monday as a sharp drop in oil prices weighed on energy company shares, while a global forecast fueled worries about an economic recovery.

The Dow slid 2 percent while the S&P 500 index lost 2.8 percent and the Nasdaq fell as much as 3.2 percent.

Shares of energy companies were among the biggest decliners as the front-month price of crude fell $2.77 to $66.78 a barrel. Exxon Mobil Corp lost 2.7 percent to $69.13, while Chevron Corp sank 3.2 percent to $65.88.

Also weighing on stocks, the World Bank said prospects for the global economy remain unusually uncertain as it cut 2009 growth forecasts for most economies.

Oil has kind of been leading us up, so you're seeing those stocks come off, said Todd Leone, head of listed trading, Cowen & Co. in New York.

On the Nasdaq, big-cap technology stocks led the decline.

The Dow Jones industrial average <.DJI> shed 188.86 points, or 2.21 percent, to 8,350.87. The Standard & Poor's 500 Index <.SPX> dropped 25.67 points, or 2.79 percent, to 895.56. The Nasdaq Composite Index <.IXIC> declined 58.15 points, or 3.18 percent, at 1,769.32.

Apple's stock tumbled 2 percent to $136.70 even as it said it had sold more than 1 million of its newest iPhone in the first three days of its launch, beating expectations. The company statement also quoted Chief Executive Steve Jobs, leading at least one analyst to speculate he was back from medical leave.

Leone said the S&P 500's break below the 900 level -- and its recent trading range -- also was a psychologically bearish factor for some investors.

Adding to a glum economic outlook, Walgreen Co posted weak quarterly results as U.S. shoppers focused on buying only necessities. The drugstore chain's stock fell 6.1 percent to $29.53.

Metal prices also slid, dragging down shares of resource companies. Freeport-McMoRan Copper & Gold Inc dropped 10.4 percent to $45.64.

After a sharp three-month rally, the major U.S. indexes have eased as traders increasingly questioned if stocks were due for a correction.

(Editing by Jan Paschal)