Rising costs for companies are worrying investors already concerned about a step down in US corporate profit growth next year as Wall Street's focus turns away from 2018's tax-fueled earnings boost.

Investors are on edge after a recent sharp pullback in US equities, including the biggest daily drop in the Dow and S&P 500 since Feb. 8 on Wednesday. A spike in US bond yields has renewed worries about rising interest rates and higher borrowing costs for companies and consumers.

Third-quarter reports will start pouring in this week from JPMorgan Chase & Co, Wells Fargo & Co and others, with investors and analysts likely looking for outlooks on higher labor costs, a stronger dollar and the impact of tariffs on raw materials prices.

“It's going to come down to earnings. The big concern isn't really what third-quarter earnings numbers are, but really what the outlook for the fourth quarter and first quarters are,” said Oliver Pursche, vice chairman and chief market strategist at Bruderman Asset Management in New York.

Even with Wednesday's selloff, the S&P 500 remains up 4.2 percent for the year. Strong earnings had helped stocks bounce back from steep drops in February and March and have kept investors largely optimistic about market valuations.

Analysts are projecting year-over-year profit growth of 21.4 percent for the third quarter, according to I/B/E/S data from Refinitiv, in part reflecting the sweeping tax overhaul approved by Congress late last year.

But this year's earnings growth, estimated at 23.1 percent, is likely the peak for the profit cycle, with growth forecast to slow to 10.3 percent in 2019 as the comparison period reflects a full year of lower corporate tax rates.

Cost pressures for companies are mounting, Lori Calvasina, RBC Capital Markets head of US equity strategy, wrote in a note on Tuesday, adding that more than a third of S&P 500 companies have seen full-year margin expectations shrink since June.

Calvasina said she's been factoring in “back half deceleration” in 2018 margins and also a stronger dollar, but expects those issues have not been “fully baked into bottom up consensus estimates yet.”

She and other strategists pointed to wage inflation as a key risk to profit margins, while companies already have cited worries about costs related to tariffs and the strengthening dollar.

In Friday's jobs report, the unemployment rate fell to near a 49-year low, suggesting the labor market has tightened further. But wages rose steadily, pointing to moderate inflation pressures.