US stocks tumbled more than two percent early Monday, joining a global sell-off sparked by a seven percent plunge in the Shanghai stock market.

About 35 minutes into trade in the first session of 2016, the Dow Jones Industrial Average was down 405.66 points (2.33 percent) at 17,019.37

The broad-based S&P 500 dropped 45.41 (2.22 percent) to 1,998.53, while the tech-rich Nasdaq Composite Index sank 137.24 (2.74 percent) to 4,870.17.

Trading on Chinese stock markets was halted early as benchmark Shanghai Composite Index dropped nearly seven percent following poor manufacturing data.

The China turbulence led to a grim opening session for 2016, with markets from Tokyo to Mumbai to Paris and Frankfurt sharply down.

Analysts said markets were also unsettled by Saudi Arabia's severing diplomatic ties with regional rival Iran after the Saudi government Saturday executed a prominent Shiite cleric.

"On the first trading day of 2016, the markets have got off to a shocking start," said analyst Manoj Ladwa at brokerage TJM Partners.

The hardest-hit sectors include technology, with Apple falling 2.3 percent, Google parent Alphabet 2.9 percent and Netflix 7.0 percent.

Int he banking sector, JPMorgan Chase lost 3.3 percent and Bank of America 2.7 percent.

US-traded Chinese stocks were in retreat, including Alibaba and Baidu, which sank 5.8 percent and 3.9 percent.

Some petroleum-linked shares rose as the Saudi-Iran tensions lifted oil prices. Oil-services companies Weatherford International and Halliburton were up 3.5 percent and 0.7 percent. ExxonMobil shed 0.4 percent, a much smaller decline compared with the index.

Pharma company Baxalta climbed 2.5 percent on reports it is in advanced talks to be acquired by Shire for about $32 billion.

Tesla Motors tumbled 7.4 percent as it announced it shipped 17,400 cars in the fourth quarter, near the low end of the company's projected 17,000-19,000 range.