US stocks tumbled Monday, erasing early gains as concerns over inflation and monetary policy weighed on sentiment. The S&P 500 and Nasdaq fell, while the Dow Jones Industrial Average also declined. The market entered the session with heightened volatility, with traders anticipating the Consumer Price Index report due Tuesday and the Federal Reserve's policy decision later in the week.
The decline came amid what some analysts term "September Scaries," a reference to the historical tendency for stocks to struggle during the month. Over the last 25 years, September has been the worst-performing month for the S&P 500 on average, and early signs this year suggest a similar pattern may be unfolding.
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The selling was not confined to mega-cap tech names. Retail stocks, measured by the S&P 500 retailing index, fell sharply, with several major components hitting multi-week lows. Transportation shares, another barometer of economic health, also declined, as investors rotated out of cyclical areas perceived as vulnerable to a slowdown.
Chart analysts note that the relative strength of these sectors against the broader market has deteriorated. The retail and transport groups have recently broken below key moving averages, a technical development that often signals further underperformance ahead. Defensive assets, typically considered safe havens, also showed weakness, an unusual combination that can indicate broader risk-off sentiment.
Market participants are now focused on the upcoming inflation data. A hotter-than-expected CPI reading could reinforce expectations for additional Federal Reserve rate hikes, further pressuring equities. Conversely, a soft print might revive hopes for a policy pivot, though many remain skeptical given the resilience of the labor market.
