Powell's statement about high inflation causes Dow to end its 5-day winning streak.

On Monday, U.S. stocks fluctuated, with the major averages reaching their lows after Federal Reserve Chair Jerome Powell warned about rising inflation and pledged to take firm action.

The Dow Jones Industrial Average dropped 201.94 points, or 0.6%, to end the day at 34,552.99. The blue-chip average fell more than 400 points at its lows. The S&P 500 finished slightly lower at 4,461.18, having been up 0.4% at its highs. The Nasdaq Composite also dipped 0.4% to 13,838.46.

On Monday, Powell stated that inflation is excessively high and vowed to implement "required measures" to regulate prices. He added that rate hikes could potentially shift from the typical 0.25% increment to more forceful 0.5% increases if needed.

The Fed raised interest rates for the first time since 2018, and the comments at the National Association for Business Economics came less than a week later.

The three major averages experienced their best week since November 2020, mainly due to the performance of growth stocks.

Michael Wilson, a strategist at Morgan Stanley, stated in a note on Monday that the recent rally in equities was one of the sharpest on record. Although it could potentially continue, he remains convinced that it is still a bear market and plans to use this strength to adopt a more defensive position.

On Monday, a China Eastern Airlines Boeing 737 passenger plane crash caused Boeing to drop 3.6%, which in turn weighed on the Dow.

The rise in benchmark 10-year yield, which exceeded 0.15 percentage points, led to a decline in tech stocks. Specifically, Meta, the parent company of Facebook, lost 2.3%, while Microsoft ended the day with a slight decrease.

On the downside, energy stocks fell Monday as oil prices dropped. Occidental Petroleum and Marathon Oil were among the top losers on the S&P 500, each falling more than 8%.

The price of Brent crude increased by more than 7% to reach above $115 per barrel, as the European Union weighed the possibility of joining the U.S. in imposing an embargo on Russian oil.

The conflict between Russia and Ukraine is being closely watched by market participants. If negotiations between Ukrainian President Volodymyr Zelenskyy and Russian leader Vladimir Putin break down, it could lead to the outbreak of a "third world war," as Zelenskyy has warned.

Peace talks between Ukrainian and Russian officials have been ongoing but have not resulted in significant progress. Additionally, Ukraine has refused to surrender the city of Mariupol to Russian troops despite an ultimatum.

The emergence of a new Covid variant in Europe is being closely examined by investors as they assess the potential impact on the region.

Chris Senyek of Wolfe Research stated in a Monday note that despite our belief that the geopolitical situation remains fluid, inflation will continue to rise, and the growth outlook is weakening, we still do not believe a sustainable bottom is in place.

—CNBC’s Patti Domm contributed to this report.