A Wall Street sign outside the New York Stock Exchange
Reuters

The recovering U.S. economy showed it isn't out of the woods yet when it comes to a soft landing as three frightening factors reared their ugly heads on Monday.

Wall Street suffered heavy losses, the benchmark 10-year Treasury yield rose four basis points, and oil prices climbed 4% due to rising tensions in the Middle East and logistical threats from another major hurricane in the Gulf of Mexico headed toward Florida.

The result was a rough day on Wall Street, with the Dow Jones Industrial Average falling 398.61 points (0.94%) to 41,954.24 after setting a record-high on Friday. The Nasdaq Composite (-1.18%) and S&P 500 (-0.96%) saw even larger percentage drops.

The ripple effect of bad economic news comes after a record-setting week on Wall Street and other positive indications of a soft landing following the Federal Reserve's interest rate cut last month. The sudden shift has investors concerned.

"You're coming off a week that was saved by the jobs report on Friday," Art Hogan, chief market strategist at B. Riley Wealth, told CNBC. "The two things I think investors are watching with the most caution here are the yields of Treasuries are inching back up and ... you've got energy prices creeping higher.

"Both those things probably have investors sort of looking at this and saying, I wonder if this gets worse before it gets better, and we don't think it will. It's certainly a reason to be cautious into the start of an earnings report season."

The dip also comes before the fresh economic data is released this week and the Federal Reserve offers some insight on the timing and extent of the next rate cut.

Read more