US open: Wall Street drops early on as energy shares tank

US equity markets suffered heavy losses on Monday as Wall Street tracked European indices lower with energy stocks dropping sharply.

The Dow Jones Industrial Average was down 1% at 17,656 by 10:03 in New York, while the Nasdaq declined 0.8% and the S&P 500 fell by another 1.1%.

"With little in the way of significant data today, the US markets couldn’t help but follow the tone of the day set by a chaotic Europe this morning, leading the Dow Jones to continue its regression away from the 18,000 level it hit pre-Christmas," said analyst Connor Campbell from Spreadex.

Inflation figures from the Eurozone, a Bank of England rate decision and the US jobs report are all due for release over the coming days, along with service-sector data from across the globe.

Oil stocks were under heavy selling pressure on Monday as crude prices declined for the third consecutive day on the back of record supplies from Russia and Iraq. Brent crude dropped below $55 a barrel (bbl) for the first time since May 2009.

Meanwhile, the euro dropped to a nine-year low against the dollar amid concerns that Greece might leave the Eurozone should anti-austerity party Siriza win the elections later this month.

Energy stocks tank

Energy majors Anadarko Petroleum, Devon Energy, Chevron Corporation, Occidental Petroleum and ConocoPhillips were among the worst performers after the opening bell.

Strong sales figures from auto giants General Motors weren't enough to push the stock higher, despite sales in December rising by a better-than-expected 19%. Ford's sales rose just 1%, causing the stock to drop sharply.

Boston Scientific surged after JPMorgan upgraded its recommendation on the medical research group to 'overweight'.

In other markets, West Texas Intermediate futures for February delivery were down 3.5% at $50.85/bbl, while Brent declined 4.2% to $54.03/bbl.

The yield on a 10-year benchmark US Treasury was down six basis points at 2.05%.