US stocks fell into bear market territory on Monday as investors anticipated the prospect of the US central bank raising interest rates once again in an attempt to tamp down inflation.
The S&P 500 fell 3.9% on June 13, plummeting the index to its lowest level since March 2021, while the Dow Jones Industrial Average sank 876 points (2.8%) and the NASDAQ Composite observed a 4.7% tumble.
The NASDAQ has dropped more than 10% in the past two trading sessions alone.
All major sectors of the S&P went into the red on Monday, with tech, consumer discretionary and energy down more than 4%. Signature Bank (SBNY) had one of the worst showings, dropping nearly 13%.
Recent data from the US Bureau of Labor Statistics revealed that May’s Consumer Price Index (CPI) rose 8.6% from a year ago, amounting to the fastest increase since 1981.
The unexpected surge was also observed in core CPI (excluding energy and food), which rose some 6%.
Stocks began a dramatic shift after the Wall Street Journal published a report suggesting the US Federal Reserve may decide to raise interest rates by 0.75 percentage points rather than the expected half-percent increase.
The US central bank has not raised interest rates by 0.75 percentage points–triple the usual amount–since November 1994.
After raising interest rates by double the usual increment last month, Fed Chair Jerome Powell asserted that the bank would continue a similar course of action until economic data provides clear and convincing evidence that inflation pressures are abating and inflation is coming down.
As consumers continue to be hit with exorbitant gas prices, mortgages and other loans are also falling victim to the fragile US economy, with the 10-year Treasury yield jumping from 3.15% to 3.37%, the highest level since 2011.
Sputnik / ABC Flash-Point News 2022.