Stocks finished Monday as investors prepared for a key week on Wall Street that could define the market's direction into the final months of the year.
The Dow Jones Industrial Average ended down 250 points, or 0.72%, to 34,496, while the broader S&P 500 slipped 0.69%. The tech-focused Nasdaq lost 0.64%.
Official data on inflation and retail sales this week, following Friday's disappointing jobs report, will provide two key readings on the impact of energy costs and labor shortages, with minutes of the Federal Reserve's September policy meeting guiding investors as to how the central bank may react to all of those factors in the coming weeks.
"Coming off the less than stellar jobs report on Friday, the market may be searching for some certainty on which way to move," Chris Larkin, managing director of trading at E*Trade Financial. "There are a lot of headwinds out there as we embark on corporate earnings, and traders will be looking for any and all indications of guidance —especially as the threat of slower growth looms large."
Goldman Sachs cut its forecast for U.S economic growth over the weekend, citing a "longer lasting virus drag on virus-sensitive consumer services" and the impact of an extended shortage in global semiconductors.
The third-quarter earnings season will begin in earnest, with 19 companies reporting this week, including JPMorgan (JPM) - Get JPMorgan Chase & Co. (JPM) Report, Citigroup (C) - Get Citigroup Inc. Report, UnitedHealth (UNH) - Get UnitedHealth Group Incorporated Report and Honeywell (HON) - Get Honeywell International Inc. (HON) Report.
“We think earnings growth will be strong again this quarter,” said LPL Financial Equity Strategist Jeffrey Buchbinder. “But those looking for massive upside surprises and big increases in estimates will probably be disappointed."
Buchbinder said the COVID-19-related supply chain disruptions and labor and materials shortages "have held corporate America back some in recent months.”
Merck (MRK) - Get Merck & Co., Inc. (MRK) Report shares ended lower after the drugmaker submitted a formal application to the Food & Drug Administration for emergency approval of its oral COVID-19 treatment.
DraftKings (DKNG) - Get DraftKings Inc. (DKNG) Report rose after analysts at Citigroup initiated coverage of the sports betting group with a 'buy' rating, citing the strength of the group's position in a maturing market.
Southwest Airlines (LUV) - Get Southwest Airlines Co. Report shares slumped amid reports that the carrier will extend cancellations, which grounded nearly a third of its fleet on Sunday, into the start of the week.