Dow’s off over 900 points in final minutes; S&P 500, Nasdaq down over 4%

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U.S. stocks remained broadly lower Monday afternoon, after hitting 2022 lows, as financial markets continued to reel from a surprise acceleration in inflation just days ahead of a Federal Reserve interest-rate decision.

What’s happening
  • The Dow Jones Industrial Average DJIA, -2.79% was down 775 points, or 2.5%, at 30,645. after dropping nearly 900 points at its session low.
  • The S&P 500 SPX, -3.87% fell 130 points, or 3.4%, to 3,769.
  • The Nasdaq Composite COMP, -4.68% dropped 465 points, or 4.1%, to 10,874.

A close below 3,837.25, which marks a 20% pullback from the S&P 500’s Jan. 3 record close, would confirm a bear market for the large-cap benchmark.

See: S&P 500 trades in bear-market territory: What investors need to know

What’s driving market

Stocks sold off sharply Monday on climbing volatility, as hot inflation data rattled markets ahead of the Federal Reserve’s mid-week policy decision.

“A lot of what’s been going on has been related to technical levels,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management, by phone.

He pointed to the S&P 500 sinking below 3,900, after holding that level on Friday. “This morning, there could have been some margin-call related activity, which created more uneasiness in the market about inflation,” he said. “I think that has to clear itself out.”

Market Extra: BlackRock isn’t buying the dip as volatility climbs in sinking stock market

Friday’s news showing the consumer-price index shooting to a fresh 40-year high of 8.6% year-over-year has caused investors to reassess how high the Fed will go in raising interest rates.

In addition to speculation that the Fed may lift interest rates as much as 75 basis points on Wednesday, the yield on the 2-year Treasury TMUBMUSD02Y, 3.354% has climbed above 3.2% — up from 2.8% on Thursday, after coming close to topping the yield on the 10-year note TMUBMUSD10Y, 3.383% and almost re-inverting that measure of the yield curve — a potential recession warning flag.

“The downside in equities is met with an inversion of the VIX curve and a brief inversion of the yield curve at the same time. That is the clearest signal the stock and bond market see a recession in the near-term,” said Ben Emons, managing director of global macro strategy at Medley Global Advisors in New York.

Underlying the market action is “a major concern about central banks losing credibility from the public,” Emons wrote in a note. “Markets are testing central bank credibility.”

The dollar also jumped, with the ICE U.S. dollar index DXY, +1.03%, which measures the currency against a basket of six major rivals, jumping 0.8% to trade near an almost 20-year high.

Concerns about monetary policy tightening aren’t limited to the U.S. Last week, the European Central Bank suggested it could follow up a quarter-point rate hike in July with a 50-basis point move in September, as the Bank of England also readies another expected rate hike this week.

The fallout has been stark in cryptocurrencies, with bitcoin BTCUSD, -15.31% extending its weekend plunge to trade below $23,500. The crypto lending platform Celsius Network has suspended withdrawals and transfers. And the world’s largest cryptocurrency exchange, Binance, instituted a pause on withdrawals of bitcoin Monday morning, founder and CEO Changpeng Zao announced on Twitter.

Read: Bitcoin tumbles through $24,000 in crypto crash. This chart shows how much worse a selloff could get.

Also see: Dow tumbles toward record 3-day streak of 500-point declines

Companies in focus
Other assets
  • August gold futures GCQ22, -2.71% fell $43.70, or 2.3%, to settle at $1,831.80 an ounce, the lowest most-active contract finish since May 18, FactSet data show.
  • The Stoxx Europe 600 SXXP, -2.41% ended 2.4% lower, while London’s FTSE 100 UKX, -1.53% shed 1.5%.
  • The Shanghai Composite SHCOMP, -0.89% ended 0.9% lower, while the Hang Seng Index HSI, -3.39% tumbled 3.4% in Hong Kong and Japan’s Nikkei 225 NIK, -3.01% dropped 3%.

Joy Wiltermuth and Steve Goldstein contributed to this article.

This article was originally published by Marketwatch.com. Read the original article here.

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