Stocks fell on Monday as worries about rising interest rates in the lead-up to the Federal Reserve meeting next week were fuelled by new data.

The Dow fell on Monday as worries about rising interest rates in the lead-up to the Federal Reserve meeting next week were fuelled by new data showing economic strength and additional indications of inflation pressures.

The Nasdaq fell 1.9%, the S&P 500 dropped 1.7%, and the Dow Jones Industrial Average dropped 1.4%.

Services activity, which the Fed has previously identified as a significant driver of inflation, increased more than anticipated in November, igniting new worries about additional expansionary Fed monetary policy measures.

While the prices paid index component of the survey, a gauge of inflation, "remains sticky at a very high level," said Jeffries, the ISM services data for November showed a leap to 56.5, well above estimates of 53.3.

At its meeting next week, the Fed is anticipated to slow the rate of increases in interest rates, but recent data, including the jobs report on Friday, indicates that "they are going to have to hold rates at a high level (sufficiently restrictive) for quite a while to get inflation back down to the 2% target," according to Jefferies.

Treasury yields increased as a result of investors considering the possibility of higher interest rates for a longer period of time in order to reduce inflation, which put pressure on market growth sectors like consumer and tech companies.

Tesla's stock dropped 6% as it was revealed that its Shanghai Gigafactory would reduce Model Y production by more than 20%.

After falling more than 11%, VF Corporation hurt consumer stocks by issuing a profit warning for the second half of the year and announcing the departure of its chief executive.

Even though OPEC and its partners, known as OPEC+, kept their production plans the same and China loosened Covid restrictions over the weekend, the energy sector saw the largest fall of about 3%, driven by a spike in oil prices.

Despite the worst start to the week for equities, some on Wall Street think the market as a whole may have bottomed, and they will probably keep looking for guidance going forward.

(Sources: investing.com, reuters.com)