Stock sell-off continues as oil sinks below $56

Stocks fell again Monday, following the market's worst week since September 2011, as oil prices continued their downward spiral and showed no signs of hitting a bottom.

In a volatile trading session, stocks opened higher as the Dow shot up more than 100 points at the opening bell before reversing course and tumbling more than 100 points.

The catalyst once again was oil, as U.S. crude fell $1.90, or 3.3%, to close at $55.91 a barrel. Oil has fallen by about half since June on waning global demand and abundant supplies. The recent drop to five-year lows has been roiling stock markets.

The Dow Jones industrial average fell 99.99 points, or 0.6%, to 17,180.84 and the Standard & Poor's 500 index dropped 12.70 points, or 0.6%, to 1989.63. It was the S&P's first close below 2000 since Oct. 30.

The major indexes have dropped five of the last six trading sessions and the Dow is off 4.3% from its Dec. 5 record close. The S&P is down 4.1% from its peak set the same day.

The Nasdaq composite index tumbled 48.44 points, or 1%, to 4605.16.

Last week, Wall Street had one of its worst weeks in two and a half years, with the Dow plunging 315 points on Friday and falling 3.8% for the week.

In corporate news: Riverbed Technology (RVBD) and PetSmart (PETM) are soaring on news that they agreed to be bought.

Riverbed, a maker of computer-network equipment, jumped 8.4% to $20.31 after agreeing to a $3.6 billion sale to private-equity firm Thoma Bravo and a Canadian pension fund.

Pet-supplies chain PetSmart rose 4.3% to $80.97 after announcing Sunday that it had agreed to an $8.7 billion sale to a group of investors led by BC Partners.

In economic news: U.S. manufacturing output in November surpassed its pre-recession peak, as auto production kicked into a higher gear. The Federal Reserve said Monday that factory production rose 1.1% last month, up from a 0.4% improvement in October.

The Federal Reserve begins a two-day meeting Tuesday and investors will be watching its policy statement for any clues on the timing of future interest rate hikes. In particular, they will be looking to see if the statement keeps two key words: "considerable time," a reference to how long the Fed plans to keep short-term interest rates near zero. Most economists think the Fed will wait until June to raise rates.

Overseas, European markets fell as the DAX of Germany lost 2.7% and the CAC 40 of France shed 2.5%. In Asia, Japan's Nikkei 225 index dropped 1.6% and Kong's Hang Seng index fell 1%.

Stocks in Australia fell Monday amid a hostage situation at a cafe in downtown Sydney. The S&P/ASX 200 closed the trading session down 0.6%.

Contributing: The Associated Press, Kim Hjelmgaard.