Stocks sank in a widespread rout amid concern about the Federal Reserve’s ability to tame decades-high inflation without throwing the economy into a recession.
The S&P 500 pushed toward its lowest since March 2021, while Treasury yields adjusted for price pressures hit the highest in more than two years. Investors are increasingly worried about the limits to Fed policy at a time when supply-chain disruptions pose a significant threat to inflation amid a ravaging war in Ukraine and China’s COVID-19 lockdowns. Data Monday showed U.S. consumers project prices in three years to be higher compared with a month ago — a troubling sign for officials trying to keep longer-term expectations anchored.
Pandemic-era stars bore the brunt of the selling, with Cathie Wood’s flagship exchange-traded fund sinking almost 10% and an ETF tracking newly public companies down the most since the onset of the pandemic. Bitcoin sank below $32,000, falling more than 50% from its all-time high. The rout also spread to energy producers, easily the market’s strongest sector in 2022. The group plunged nearly 8% as crude slid. Big tech was not spared, with the likes of Tesla Inc., Amazon.com Inc. and Nvidia Corp. off by at least 5%. The Cboe Volatility Index spiked to its highest on a closing basis in two months.
