Wall St. drops in late selloff; energy, airlines fall

NEW YORK (Reuters) - U.S. stocks dropped more than 1 percent on Monday, with the S&P 500 closing below a key technical support level, as declines in energy and airline shares led a late-day selloff.

The S&P energy sector <.SPNY> lost 2.9 percent, extending recent losses. It is down 7.6 percent for the last three sessions, its worst three-day slide since September 2011.

Five of the 10 S&P 500 sector indexes - industrials, telecommunications, consumer discretionary and materials - were in negative territory for the year.

The day's declines followed the S&P and Nasdaq's worst weekly percentage declines since May 2012 and concerns that the market is in for further weakness and more jolts. The CBOE Volatility index <.VIX> ended at 24.64, its highest close since early June 2012.

In a potential sign of more declines ahead, the S&P 500 closed below its 200-day moving average for the first time since Nov. 16, 2012. It has lost 4.8 percent in the last three sessions, its worst three-day decline since November 2011.

Airline stocks fell after a Dallas nurse contracted Ebola while caring for a dying Liberian patient.

"It's just a spillover on the Ebola concerns. Whether it's correct or incorrect, trader opinion right now is continued worsening of the Ebola situation is going to have a negative effect on travel and leisure," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

Shares of United Airlines fell 7.3 percent to $40.55, while shares of Delta Air Lines dropped 6.1 percent to $30.90. Shares of Carnival were down 4.6 percent at $33.88. The Dow Jones transportation average <.DJT> fell 2.2 percent.

The Dow Jones industrial average <.DJI> fell 223.03 points, or 1.35 percent, to 16,321.07, the S&P 500 <.SPX> lost 31.39 points, or 1.65 percent, to 1,874.74 and the Nasdaq Composite <.IXIC> dropped 62.58 points, or 1.46 percent, to 4,213.66.

The largest percentage gainer on the S&P 500 was CSX Corp , up 5.9 percent, while the largest percentage decliner was QEP Resources , down 9.2 percent.

Canadian Pacific Railway Ltd has approached CSX about merging the two North American railroad operators to create a transcontinental carrier worth more than $60 billion, according to the Wall Street Journal.

The largest percentage gainer on the Nasdaq 100 was F5 Networks INC , up 1.9 percent, while the largest percentage decliner was Expedia , down 5.8 percent.

Declining issues outnumbered advancing ones on the NYSE by 2,061 to 976, for a 2.11-to-1 ratio on the downside; on the Nasdaq, 1,525 issues were falling and 1,156 advancing for a 1.32-to-1 ratio favoring decliners.

The benchmark S&P 500 index posted three new 52-week highs and 53 new lows; the Nasdaq Composite showed 22 new highs and 308 new lows.

(Editing by Nick Zieminski)

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