Dow drops 360 points, heads for biggest decline in 5 weeks

Stocks gave back their earlier gains on Monday as Wall Street digested weak U.S. economic data while trade talks with China neared the finish line.

The Dow Jones Industrial Average fell 360 points, erasing a 129-point gain and was on pace for its biggest decline since late January. Boeing was one of the worst performers in the Dow, sliding 2.5 percent. The S&P 500 was down 0.9 percent after climbing nearly half a percent, breaking back below the key 2,800 level and on pace for its biggest drop since Jan. 22. The Nasdaq Composite traded 1 percent lower. Earlier in the day, it was up as much as 0.64 percent.

Stocks started giving back their gains after the Commerce Department said construction spending dropped 0.6 percent in December. Economists polled by Refinitiv had forecast a gain of 0.2 percent. 

RELATED: Take a look at the stock market before the 2016 election:

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New York Stock Exchange before the election
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 7, 2016. REUTERS/Brendan McDermid
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 7, 2016. REUTERS/Brendan McDermid
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 7, 2016. REUTERS/Brendan McDermid
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 7, 2016. REUTERS/Brendan McDermid
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 3, 2016. REUTERS/Brendan McDermid
Pedestrians walk along Wall Street near the New York Stock Exchange (NYSE) in New York, U.S., on Monday, Oct. 31, 2016. U.S. stocks rose from a six-week low amid an increase in deal activity as traders assessed the outlook for the presidential election and interest rates in the world's largest economy. Photographer: Michael Nagle/Bloomberg via Getty Images
NEW YORK, NY - NOVEMBER 01: Traders work on the floor of the New York Stock Exchange (NYSE) on November 1, 2016 in New York City. As Wall Street continues to feel election uncertainty, the Dow Jones closes fell more than 100 points. (Photo by Spencer Platt/Getty Images)
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Nov. 4, 2016. U.S. stocks fluctuated amid payrolls data that bolstered speculation the economy is strong enough to weather higher interest rates, while investors remained wary before the looming presidential election. Photographer: Michael Nagle/Bloomberg via Getty Images
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Nov. 4, 2016. U.S. stocks fluctuated amid payrolls data that bolstered speculation the economy is strong enough to weather higher interest rates, while investors remained wary before the looming presidential election. Photographer: Michael Nagle/Bloomberg via Getty Images
NEW YORK, NY - NOVEMBER 01: Traders work on the floor of the New York Stock Exchange (NYSE) on November 1, 2016 in New York City. As Wall Street continues to feel election uncertainty, the Dow Jones closes fell more than 100 points. (Photo by Spencer Platt/Getty Images)
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, Oct. 31, 2016. U.S. stocks rose from a six-week low amid an increase in deal activity as traders assessed the outlook for the presidential election and interest rates in the world's largest economy. Photographer: Michael Nagle/Bloomberg via Getty Images
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The indexes also rolled over as the S&P 500 tech sector fell 1 percent. Shares of Salesforce were the biggest decliners in the sector, sliding more than 4 percent ahead of their quarterly earnings release.

Equities initially rose on news that a trade deal between the U.S. and China could be on the horizon.

"The news has been priced into U.S. equities," said John Davi, chief investment officer at Astoria Portfolio Advisors. "But if you take a step back, positioning is still pretty light in U.S. equities, so even though we think everything is priced in, we could rally a little bit more. People haven't re-risked their portfolios since December. If you look at fund flows … it's still very light on the positioning side for U.S. stocks."

The back-and-forth on trade between the two countries has sent ripples through financial markets since last year, with investors fretting how tighter trade conditions could impact corporate profits.

Monday's gains come after the S&P 500 closed at its highest level since Nov. 8, retaking the closely watched 2,800 level.

"While there was fear and panic in the markets in December, there is by no means unanimity of bullishness up here at 2,800," said Marc Chaikin, CEO of Chaikin Analytics. "This is good news for investors looking out over the next 6-to-12 months."

U.S. stocks have been on fire this year, with the S&P 500 rising more than 11 percent in that time period through Friday's close.

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