"Certainly, the bond market is suffering from rising inflation anxieties," said Jim Paulsen, chief investment strategist at The Leuthold Group, in a note to clients. "Investors face a significant risk that only their grandparents had to deal with—a bond market potentially demanding a larger inflation buffer."
"Many believe inflation will only rise modestly in the balance of this recovery," Paulsen said. "However, even a moderate acceleration in wage and consumer price inflation toward 3.5% to 4% could produce an outsized and surprisingly aggressive response from the bond market."
Both the S&P 500 and Dow dropped more than 4 percent last week. The Nasdaq fell 3.7 percent. The S&P 500 also posted a third consecutive weekly loss, its longest such streak since June 2016.
Those declines were largely led by technology stocks, which had their worst week since March after falling 3.8 percent as a sector.
Goldman Sachs Chief U.S. Equity Strategist David Kostin said it is time to buy into growth stocks as last week's sell-off is largely over."We see limited further downside," he said in a note. "Despite the recent sell-off, equity fundamentals are strong and we remain constructive on the path of the S&P 500."
The recent moves come as the latest corporate earnings season kicks into high gear. Netflix, Morgan Stanley, Johnson & Johnson, Procter & Gamble and Honeywell are among the companies scheduled to release third-quarter earnings this week.
Bank of America reported better-than-expected earnings and revenue on Monday. The stock, however, fell 1.9 percent.
Expectations for this earnings season are high. Analysts polled by FactSet expect third-quarter S&P 500 profits to have expanded by 19 percent on a year-over-year basis.
In data, retail sales rose just 0.1 percent in September. Economists polled by Refinitiv expected a gain of 0.6 percent.
contributed to this report.