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More signs of distress in China's economy and rising U.S. bond yields caused a big drop in U.S. stocks on Monday.

The Dow Jones industrial average was down 180 points, or 1.2 percent, at 14,619 as of 10:50 a.m. It had been down as much as 247 points after the first hour of trading.

Banks and basic materials companies led a broad decline in U.S. stocks as traders fretted over a 5 percent slump in China's benchmark index and a tightening of lending in the world's second-largest economy.

U.S. bond yields rose sharply, continuing a surge from last week when the Federal Reserve laid out a possible timetable for when it could end its massive bond-buying program.

The selling was broad-based: 98 percent of stocks in the Standard & Poor's 500 index declined. The S&P 500 was down 24 points, or 1.5 percent, to 1,568. The S&P has fallen 6 percent from its record high of 1,669 reached on May 21.

The market is having its biggest pullback since last fall, when the S&P lost 7.4 percent between Oct. 17 and Nov. 15. That decline happened in the run-up to the November presidential election, when investors worried about a stalemate between the White House and Congress over the budget.

The market's decline over the past month is still short of the 10 percent fall from a peak that market watchers refer to as a "correction."

Janet Engels, senior vice president and director of the private client research group at RBC Wealth Management, said the decline "probably has further to go."

The last time the U.S. stock market had a full-blown correction was July 22-Oct. 3, 2011, when the S&P 500 fell 18.3 percent. That fall was caused by concern that a fight between U.S. lawmakers over extending the debt ceiling would push the U.S. into default.

Since starting its bull run in March 2009, the S&P 500 has had six pullbacks and two corrections. So far, the market has come back stronger from each set back. The S&P is still up 131 percent during this four-year bull market.

Before Wall Street opened for trading on Monday, Asian markets were already sharply lower, led by a 5 percent plunge in China's Shanghai Composite Index. That was the index's biggest loss in four years. The decline was prompted by a government crackdown on off-balance sheet lending, which made investors worry about China's economic growth.

The selling spread to Europe, but markets erased some of their early losses. France's benchmark stock index was down 1.2 percent, Germany's 0.9 percent.

In the U.S., the yield on the 10-year Treasury note jumped from 2.54 Friday to 2.61 percent, the highest level in almost two years. As recently as May 3, those yields were just 1.6 percent.

The rise in U.S. rates began after comments from the Federal Reserve last week that said the Fed's bond-buying program could wrap up next year as long as economic conditions continue to improve. The Fed's easy-money policies have made borrowing cheaper and boosted corporate balance sheets.

Investors have worried that higher U.S. interest rates will hurt homebuilding companies if steeper mortgage rates make it harder for people to buy homes. PulteGroup slumped 67 cents, or 3.6 percent, to $18.13.

The Nasdaq composite fell 42 points, or 1.2 percent, to 3,315.

Other stocks with big moves included:

— Tenet Healthcare rose $2.55, or almost 9 percent, to $45 after offering to buy Vanguard Health Systems Inc. for $1.8 billion. The offer of $21 per share pushed Vanguard stock up $8.09, or 64 percent, to $20.62.

— Facebook fell 82 cents, or 3.3 percent, to $23.71. Monday was the first full trading day after Facebook acknowledged it had accidentally exposed contact information for 6 million users to some other users.

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AP Business Writer Steve Rothwell contributed.