NEW YORK -- Stocks tumbled Monday, despite some upbeat corporate and economic news, after a big drop in Chinese shares heightened concerns that U.S. markets have risen too far too fast.

The Dow Jones industrial average (INDU) was down 64 points, or 0.7%, with about one hour left in the session. The S&P 500 (SPX) index lost 9 points, or 0.9%, and the Nasdaq composite (COMP) slid 22 points, or 1%.

The Shanghai Composite index fell 6% overnight to a three-month low on worries about bank lending.

Dan Cook, senior market analyst at IG Markets, said the drop in China's benchmark index was the "main driver" of Monday's selloff, adding that investors are also very nervous about next month.

"There is already a great deal of speculation about how tough September may be on the equity bulls," Cook said.

Bank stocks, which have led the market higher in recent sessions, came under pressure. Citigroup (C, Fortune 500) was down 4.5%, while Morgan Stanley (MS, Fortune 500) lost about 3.5%. Troubled insurance giant AIG (AIG, Fortune 500) fell 10%.

Oil prices sank nearly 5%, falling below $70 a barrel. That dragged on shares of oil services firms Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500). Industrial names such as Boeing (BA, Fortune 500) and Caterpillar (CAT, Fortune 500) also fell sharply.

September is historically a bad month for stocks and market participants are bracing for a possible pullback following a surprisingly strong summer advance.

Between the March 9 lows and Friday's close, the S&P 500 gained 52%, as investors responded to stronger corporate results and improved economic data. However, analysts say more concrete signs of economic growth are now necessary to keep the rally going.

"We have seen a major rally since the March lows," Cook said. "Because of this, the S&P appears to be way overpriced."

Stocks closed mixed Friday. The Dow and S&P both ended lower, while the Nasdaq gained 1 point to its highest level since early October.

Mergers and acquisitions: Walt Disney (DIS, Fortune 500) said it would acquire comic book publisher Marvel Entertainment (MVL) for approximately $4 billion. Shares of Marvel surged 25%.

In other deals, oilfield services company Baker Hughes (BHI, Fortune 500) said that it would purchase rival BJ Services (BJS, Fortune 500) in a cash-and-stock deal worth approximately $5.5 billion.

Economy: A report showed manufacturing activity in the Midwest was stronger than expected during August.

The Institute for Supply Management's Chicago PMI rose to 50 in August from 43.4 in July. Economists surveyed by Briefing.com had forecast a reading of 47.2.

The report comes one day before the ISM releases its national manufacturing report, which is forecast to rise to a level signaling expansion for the first time since January 2008.

Investors are looking toward a number of economic reports later in the week, including auto sales for August on Tuesday and the widely watched monthly employment report on Friday.

Other markets: In currency trading, the dollar fell against the euro and retreated versus the yen.

Oil for October delivery was down $3.07 to settle at $69.68 a barrel in New York.

Bond prices rose, with the benchmark 10-year note gaining 9/32 to 101-23/32. Its yield, which moves inversely, was 3.41%.

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