Stocks fell broadly on Wall Street, extending the market's losses amid worries about inflation and the path ahead for the economy.
The S&P 500 shed 2.1% Monday, its biggest drop since mid-June, to close at 4,137. Some 95% of stocks in the benchmark index lost ground. It finished in the red last week, breaking a four-week winning streak.
The Dow Jones Industrial Average lost 1.9%, closing at 33,063, and the Nasdaq also fell by 2.6%. Technology companies and retailers had some of the heaviest losses. Amazon lost 5%; Meta lost 4.9% and Apple lost 3.9%.
Movie theater operators were volatile following a report that Cineworld is considering filing for Chapter 11 bankruptcy protection. The industry is still struggling to recover from the virus pandemic. AMC Entertainment fell 3.4% in choppy trading. Cinemark fell 4.6%.
"Stocks saw selling out of the gate and that continued pretty much right into the close," analysts at Vital Knowledge said in a note.
Bright spots in the market included Signify Health, which jumped 32.4% after The Wall Street Journal reported that Amazon would bid for the company.
Smaller company stocks also fell, sending the Russell 2000 index 2.2% lower.
Bond yields gained ground. The yield on the 10-year Treasury, which influences rates on home mortgages and other loans, rose to 3.04% from 2.97% late Friday.
The broader market's losses come on the heels of a weeks-long rally. Investors are trying to figure out where the economy goes from here as stubbornly hot inflation hurts businesses and consumers. Record-high inflation also has investors focusing on central banks and their efforts to fight high prices without further damaging economic growth.
"You've had quite a rally and there's reason to not be sure where we're going from here," said Tom Martin, senior portfolio manager with Globalt Investments. "There's still decent potential for a recession."
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Minutes last week from the Federal Reserve's July board meeting affirmed plans for more rate hikes despite signs of weaker economic activity. Traders worry that aggressive steps to slow the economy might go too far and bring on a recession. The U.S. economy has already contracted through the first half of 2022 and Wall Street will get more information on Thursday when the government releases an updated report on the U.S. economy for the second quarter.
"The longer inflation remains elevated, the more likely consumers must tap into credit and savings to support their spending habits," Jeffrey Roach, chief economist at LPL financial, said in a note.
Investors are also looking ahead to this week's Federal Reserve conference for signals about more possible U.S. rate hikes to cool surging inflation. The central bank holds its annual meeting in Jackson Hole, Wyoming on Thursday. Fed Chair Jerome Powell is scheduled to give a speech on Friday morning.
The Fed is holding its meeting following a heavy week of company and economic data that showed inflation is still squeezing the economy, but consumer spending remains resilient. Falling gasoline and food commodity prices, for wheat and corn, have helped relieve some of that pressure. That helped essentially stall inflation's advance in July, though prices still remain stubbornly high.
"I don't think we're out of the woods yet on inflation," Martin said. "We still don't really know how inflation is going to pan out and what the Fed is going to do."