The rally on Wall Street stumbled over the past week as investors were caught off-guard by data highlighting inflation concerns, and amid caution ahead of Tuesday's congressional election.
The Dow Jones Industrial Average of 30 blue-chip stocks shed 0.80 percent on the week to end at 11,986.44 as a selloff on Friday sent the index below the key level of 12,000 points.
The technology-heavy NASDAQ composite meanwhile gave back 0.84 percent to 2,330.79 and the broad-market Standard & Poor's 500 dropped 0.80 percent on the week to 1,364.30.
The market until now had been concerned about faltering US economic growth. But a stronger-than expected report on the US labor market and other data highlighted concerns that inflation may still be a problem.
These fears were revived by a weak report on US labor productivity -- showing no gain in the third quarter -- and strong increases in labor costs.
Also fueling concerns was Friday's data showing unemployment falling to a five-year low of 4.4 percent as 92,000 jobs were created last month, with another 139,000 added in revisions to August and September data.
Economists said this means that a hoped-for cut in US interest rates from the Federal Reserve may not come any time soon.
"The tight labor markets are putting pressure on wages," said Joel Naroff of Naroff Economic Advisors.
"The employment numbers reinforce the results from the productivity and employment cost reports. That has to scare the Fed," he said.
Al Goldman at AG Edwards said there was some lingering anxiety about Tuesday's congressional elections.
"The market is fully aware that the odds favor the GOP [Republicans] losing control of the House and retaining the Senate. Probably not discounted is the loss also of the Senate or no loss at all," he said.
"The former would probably bring in some short-term selling, the latter would probably bring in a bounce," Goldman said.
Others noted that the stock market needed a pause after a spectacular series of gains in recent weeks.
"Given the overbought market condition and the relatively high levels of bullish opinion, the markets are set up for a normal pullback," said Bob Dickey at RBC Dain Rauscher.
Eugene Peroni at Claymore Research said he believes the market, or at least the Dow index, has seen its high for the year, even though he sees the longer-term trend as bullish.
"At this juncture I am inclined to rein in my expectations for the Dow through year-end," Peroni said in a note to clients.
The 12,000 level "had been my most optimistic expectation just a few months ago," he said.
"That level has been exceeded amid the euphoria of third-quarter earnings performances. However, many of the leading Dow components are now extended by 10 percent or greater, above even very short-term support levels, and many stocks are now more susceptible" to a correction.
But Peroni said he expected a "garden variety consolidation rather than a steep and sustained decline. This process could continue through year end."
Despite the correction he sees, Peroni said, "I am maintaining my secular cycle target of Dow 13,000."
Bond prices slid over the past week as investors shifted expectations on inflation and interest rates. The yield on the 10-year Treasury bond rose to 4.715 percent from 4.675 percent a week earlier, while that on the 30-year bond increased to 4.811 percent against 4.796 percent.