Wall Street stocks retreated early Monday on worries over slowing global growth and diminishing hopes for an aggressive Federal Reserve interest rate cut. 

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, US, July 1, 2019.  (File photo: VCG)

US markets continued to pull back after Friday's strong June jobs report left investors betting that the Fed would cut interest rates by less than previously thought.

About 20 minutes into trading, the Dow Jones Industrial Average stood at 26,770.79, down 0.6 percent.

The broad-based S&P 500 also shed 0.6 percent, falling to 2,973.91, while the tech-rich Nasdaq Composite Index was one percent lower at 8,084.48.

US stocks have pulled back since all three indices closed at records on Wednesday following a cease-fire on new tariff actions in the US-China trade war amid hopes for easier monetary policy.

Fed Chair Jerome Powell is set to appear in semi-annual congressional appearances this week. Investors will also be closely eyeing consumer pricing data, another factor considered by the Fed.

But a note on Monday from Morgan Stanley warned stocks were vulnerable even if the Fed cuts interest rates. Morgan Stanley cut its rating on equities to "underweight," based on an assessment of the pluses and minuses of a rate cut.

"Our concern is that the positives of easier policy will be offset by the negatives of weaker growth," said the note from Morgan Stanley.

"We think a repeated lesson for stocks over the last 30 years has been that when easier policy collides with weaker growth, the latter usually matters more for returns."