The major market indexes have experienced extreme volatility since the beginning of the year, with the DJIA slipping 3.3% in January, and the S&P 500 and Nasdaq retreating 5.3% and 8.9%, respectively, marking their worst monthly performance since March 2020. The volatility has been driven by geopolitical tensions between the U.S. and Russia over Ukraine and the Fed’s decision to increase interest rates multiple times this year to control multi-decade high inflation.
The Labor Department recently has released consumer price index data for January, with inflation rising 7.5% year-on-year, exceeding Dow Jones’ 7.2% estimate and marking the highest inflation level since February 1982. This could foster further stock market volatility in the near term, raising the likelihood of an aggressive interest rate hike in March.
