Wall Street ended sharply lower on Monday as investors dumped Big Tech and other growth stocks in the face of rising Treasury yields, while concerns about a potential U.S. government debt default also fed caution.

Apple, Microsoft, Amazon and Alphabet, the U.S. stock market's four most valuable companies, each dropped more than 2 percent.

Facebook, the fifth most valuable company, slumped almost 5 percent after its app and its photo-sharing platform Instagram were down for thousands of users, according to outage tracking website Downdetector.com. 

"For Big Tech, this is a short- to medium-term thing, part of a correction process. Rates were clearly too low, due in large part to central bank policies, and now as investors anticipate those policies getting clawed back, rates are moving closer to their real value," said Jack Ablin, chief investment officer at Cresset Wealth Advisors in Palm Beach, Florida.

U.S. Treasury yields rose as investors fretted about the lack of a debt ceiling fix in the U.S. Congress and looked ahead to the release this week of September employment data, which could pave the way for the tapering of Federal Reserve asset purchases.

U.S. President Joe Biden said he cannot guarantee the government will not breach its $28.4 trillion debt limit unless Republicans join Democrats in voting to raise it, as the United States faces the risk of a historic default in just two weeks. 

Recent data showing increased consumer spending, accelerated factory activity and elevated inflation growth have fueled bets that the Federal Reserve could start tightening its accommodative monetary policy sooner than expected.

The S&P 500 and Nasdaq's closes were their lowest since July.

The S&P 500 has now fallen about 5 percent from its record high close on Sept. 2.

However, over half of S&P 500 stocks have declined 10 percent or more from their 52-week highs, including 71 stocks down more than 20 percent.

Spooking investors further, St. Louis Federal Reserve Bank President James Bullard warned that inflation could remain elevated for some time.

Some pockets of the market enjoyed a bounce, with the S&P 500 energy and utilities indexes both rallying.

Shares of Merck & Co. climbed 2.1 percent. Merck shares also rose on Friday on news the company was developing the first oral antiviral medication for COVID-19.

Tesla Inc. rose 0.8 percent after the electric vehicle maker reported record quarterly deliveries that beat estimates.

The Dow Jones Industrial Average fell 0.94 percent to end at 34,002.92 points, while the S&P 500 lost 1.30 percent to 4,300.46.

The Nasdaq Composite dropped 2.14 percent to 14,255.49.

U.S. Trade Representative Katherine Tai said on Monday she intends to have "frank" conversations with her counterpart in China in the coming days and discuss progress made under the phase one trade agreement.

Read more: U.S. trade chief intends to have 'frank' talks with China

(With input from Reuters)