U.S. stocks fell on Monday as investors worried about the potential strength and timing of an economic recovery, sending oil prices and energy shares lower.
Data that showed the U.S. service sector contracted at a slower pace in June eased some of the jitters but was not enough to overcome last week's much worse-than-expected jobs report.
Although unemployment is viewed as a lagging indicator that will likely worsen even as the economy starts to recover, analysts said the consumer spending that will be a linchpin of stabilization won't materialize if people are worried about losing their jobs.
The economy is getting squeezed from both ends, so the worry is that the recovery is going to be much slower and much more erratic than most people felt, said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville.
Oil touched a five-week low and fell to around $64 a barrel, sending Exxon Mobil Corp
Although the weaker oil prices bode well for recession-weary consumers, strong commodity prices have been viewed as a signal the global economy is finding its footing.
The Dow Jones industrial average <.DJI> fell 54.87 points, or 0.66 percent, to 8,225.87. The Standard & Poor's 500 Index <.SPX> lost 7.83 points, or 0.87 percent, to 888.59. The Nasdaq Composite Index <.IXIC> gave up 23.16 points, or 1.29 percent, at 1,773.36.
The S&P 500 is up about 31 percent from March's 12-year low, following a rally spurred by bets the economy will show signs of recovery later in the year. The market run-up has stalled of late as investors have become cautious and taken some profits.
The focus is also on the start of earnings season, which kicks off with Alcoa Inc
Bucking the trend, American Express Co
(Editing by Padraic Cassidy)