The Dow shaved just over a tenth of a percent, the S&P dropped nearly four-tenths of a percent and the Nasdaq lost more than one percent.
Beijing on Monday said it would shut businesses and schools in hard-hit districts and tighten rules for entering the city, as infections ticked higher, spooking investors.
Robert Schein is Managing Director, Partner, and Chief Investment Officer of Blanke Schein Wealth Management.
"It's the manufacturing - anybody's who's linked to China, any sector who's linked to China, this could cause major, sort of, currents in the global markets in the weeks and months to come. So it's a story that needs to be watched, and something that could impact globally on the supply side once again."
U.S. casino operators with businesses in China including Wynn Resorts, Las Vegas Sands, MGM Resorts International and Melco Resorts & Entertainment all fell at least 2%.
In other movers, Walt Disney jumped 6.3% on the news of Bob Iger's return as chief executive to the entertainment giant.
And Tesla plummeted nearly 7% after the electric-car maker said it will recall vehicles in the U.S. over an issue that may cause tail lights to sometimes fail to illuminate.
