Stocks fell Monday as the major averages extended two straight weeks of losses for the first time since September as market participants fear the U.S. economy is heading into a recession. The Dow Jones Industrial Average dropped over 160 points, while the S&P 500 and Nasdaq Composite fell 0.9% and 1.5%, respectively.

Here's how the market settled on Monday:

S&P 500 Index (SPY  ): -0.90% or -34.70 points to 3817.66

Dow Jones Industrial Average (DIA  ): -0.49% or -162.92 points to 32,757.54

Nasdaq Composite Index (QQQ  ): -1.49% or -159.38 points to 10,546.03

Monday's moves follow a broad sell-off last week after the Federal Reserve issued a 50-basis point interest rate hike. Fed Chair Jerome Powell also signaled that the central bank will continue to raise rates throughout the new year and policy will remain restrictive for an extended period of time as it works aggressively to stabilize prices.

That high rate environment has raised recession fears across Wall Street, leading the major averages towards a deeply negative December. The Dow is currently about 5% down for the month, which the S&P 500 and Nasdaq are nearly 6% and 7% lower, respectively.

In the headlines on Monday, Disney (DIS  ) shares slipped after its highly anticipated film "Avatar: The Way of the Water" failed to attract audiences over the weekend. The movie brought in $134 million for its opening weekend, less than the $175 million expected on Wall Street and below the $135 million to $150 million target projected by the entertainment giant.

Shares of Aerojet Rocketdyne (AJRD  ) rose Monday after L3Harris Technologies (LHX  ) agreed to acquire the rocket maker for $4.7 billion in cash, or $58 per share.

Oppenheimer downgraded Tesla (TSLA  ) on Monday to Perform from Outperform, citing challenges ahead for the electric vehicle maker as sentiment surrounded CEO Elon Musk's purchase of Twitter has "severely damaged" TSLA shares.

"The combination of Twitter's unclear cash needs and diminishing options for Mr. Musk to serve those needs amid the broad public backlash driven by inconsistent standards application for Twitter users, notably banning select journalists, is pushing us to the sidelines on TSLA," analyst Colin Rusch wrote in a note to clients. "We believe increasing negative sentiment on Twitter could linger long term, limiting its financial performance and become an ongoing overhang on TSLA."

On the economic front, home builder sentiment continued to decline in December for the 12th straight month. Sentiment for single-family homes fell 2 points to 31 in December, according to the National Association of Home Builders/ Wells Fargo Housing Market Index, with readings below 50 indicating negative growth. This was also the lowest reading for the index since mid-2012, excluding the brief drop at the start of the COVID pandemic.

"The silver lining in this HMI report is that it is the smallest drop in the index in the past six months, indication that we are possibly nearing the bottom of the cycle for builder sentiment," said Robert Dietz, chief economist for NAHB, in a statement. "Mortgage rates are down from about 7% in recent weeks to about 6.3% today, and for the first time since April, builders registered an increase in future sale expectations."

Looking ahead, investors will access key year-end economic reports on the housing market, consumer confidence, inflation and U.S. GDP. There are also a few more quarterly earnings reports slated for release this week, including reports from FedEx (FDX  ) and Nike (NKE  ).

Despite the market's recent negative streak, there may be a brighter two weeks ahead--a possible Santa Claus rally--for Wall Street as the year comes to a close, according to Citi (CITI  ).

"Just as the Grinch has a late epiphany, the final-two-week equity seasonals are brighter, and less influenced by the poor YTD returns," wrote analyst Alex Sauders in a Monday note. "To be sure, our Global Asset Allocation team remains bearish going into a recession year but there is the possibility of some welcome short-term relief from a challenging year over the next few weeks."