US stocks plunged early Monday, falling in a “bear market” on anticipation of the Federal Reserve’s monetary tightening this week amid runaway inflation.
Global equities, oil prices and bitcoin fell sharply on fears of rising inflation. Another ugly session for equities left the US benchmark on the verge of a bear market again.
The market’s latest losses, which come on the heels of three straight down sessions, put the S&P 500 in a bear market, defined as 20% from the market peak.
About 35 minutes into trading, the broad-based S&P 500 was at 3,796.66, down 2.7 percent from Friday’s session and up more than 21% from January.
The Dow Jones Industrial Average fell 2.1% to 30,746.33, while the tech-rich Nasdaq Composite Index fell 3.2% to 10,972.92.
US equities have been volatile throughout this year, as central banks have suddenly shifted from easier currency policies to aggressive tightening through phased stimulus programs and higher interest rates.
Friday’s US inflation report has exacerbated this dynamic, undermining expectations that pricing pressure has peaked, or peaked, and increasing the prospect of an even more aggressive rate hike from Washington.
“The March report was considered the peak in this inflation cycle, but the May headline CPI reading is now the highest since 1982,” said a note by CFRA Research’s Sam Stovall. fed.
Among the separate companies, Duke Realty gained 1.0% after it agreed to be acquired by logistics real estate firm Prologis for $26 billion. Prologis declined 7.1%.
bitcoin crash
Bitcoin fell below an 18-month low of $24,000 as investors shunned riskier assets amid a sell-off in global markets.
The unit was also hit hard by the news that cryptocurrency lending platform Celsius Network halted withdrawals, citing volatile conditions.
“It’s not surprising to see such a strong downturn as we have seen an increased correlation between traditional stocks, which have tanked recently, and the cryptocurrency market over the past few years,” said Walid Kaudamani, Chief Market Analyst at XTB. “
Briefing.com analyst Patrick O’Hare said the carnage in the crypto market is “alleviating concerns about growth prospects due to the low money effect that also includes falling stock and bond prices.”