- Dow closes down 653 points, or 2%, at 32,245.70
- Nasdaq down 521 points, or 4.3%, at 11,623.25
- S&P 500 slides 132 points, or 3.2%, at 3,991.34
- 10-year notes trading at 3.034%
- WTI crude futures down $7.33 at $102.44 per barrel
- VIX index +16.1% to 35.03 points
- Dollar index +0.05% to 103.697
U.S. stocks slumped lower again Monday, taking the S&P 500 below the 4,000 point level for the first time in more than a year, as investors sailed into a wall of worry linked to a slowdown in China, surging inflation and an aggressive Federal Reserve in the U.S. and a worrying escalation in Russia's war on Ukraine in Europe.
With last Friday's sell-off on Wall Street, which extended the longest weekly losing streak in more than a decade for the S&P 500, bleeding into the Asia session, stocks were already fragile when investors were hit with data showing a sharp slowdown in China exports and a warning from Premier Li Keqiang about the country's Covid-hit jobless rate.
Extended crackdowns on business and travel in both Beijing and Shanghai added to the gloom, while a expected slump in China demand for oil and energy products offset a proposed G7 ban on Russian crude exports, sending WTI futures lower in overnight trading.
WTI futures for June delivery were marked $7.40 lower at $102.37 per barrel while Brent contracts for July fell $7.29 to trade at $105.11 per barrel.
In Europe, with Russian President Vladimir Putin expected to speak at a celebration marking the end of the Second World War today, investors are worried that the conflict could escalate quickly if the so-called 'special operation' is formally upgraded to a war by Russian lawmakers.
The region-wide Stoxx 600 was marked 2.8% lower by the close of trading in in Frankfurt trading while the FTSE 100 fell another 2.2% in London.
Wrapped around all of those concerns, as well, is the specter of more market volatility, with the CBOE's VIX index, also known as Wall Street's 'fear gauge', rising another 16.2% to trade at 35.09 points, near to the highest levels since early March.
Safe-haven trading lifted the U.S. dollar index, which tracks the greenback against a basket of six global currencies, to a fresh 20-year high of 104.187 in overnight dealing, before easing to 103.73, while benchmark 10-year Treasury note yields hit a December 2018 high of 3.193% in the overnight session before a wave of safe-haven buying brought them back to 3.032% by the close of the session.
Bitcoin prices slumped below $31,000, extending its 2022 decline for the world's biggest cryptocurrency to nearly 30%, as investors plough cash into risk-free assets while finding higher returns in government bonds and the U.S. dollar.
"The combination of rising US yields, a rising US dollar and falling risky asset prices is likely a self-reinforcing set of developments that it dangerous as long as correlations across assets remains so high," said Saxo Bank strategists. "Financial conditions are still tightening, the VIX is above 30, interest rates are rising across the curve, and the USD is also rallying."
"US equity sentiment continues to be weak with S&P 500 futures testing this morning the Friday lows around the 4,060 level, which is the key level to watch on the downside," the team added. "If S&P 500 futures close below 4,100 today it will be the lowest close since May 2021 and reinforcing the downward trend."
On Wall Street, the Dow Jones Industrial Average was marked 653 points lower by the close of trading while the S&P 500, which is down 16.25% for the year, fell another 129 points. The tech-focused Nasdaq retreated 521 points.
Looking into the coming week, inflation data will likely take center-stage this week as investors match the hawkish turn of the Federal Reserve, and the prospect of faster rate hikes, against what could be a peak in consumer price readings heading into the summer months.
The Commerce Department will publish April inflation data on Wednesday, with analysts expecting an easing in the headline reading from a four-decade high of 8.5% to around 8.1%, with so-called core inflation, which strips out volatile components such as food and energy, also slowing by around 50 basis points to an annual rate of 6%. Factory gate inflation data will follow on Thursday.
The readings will provide an important context for last week's assertion by Fed Chairman Jerome Powell that he and his colleagues are not "actively considering" a 75 basis point rate hike, given the fact that inflation conditions could moderate over the coming months.
The CME Group's FedWatch tool suggests only a 12.6% chance of a 75 basis point Fed Funds increase next month.
On the earnings front, a quiet week is expected with only 20 S&P 500 companies reporting, including Tyson Foods (TSN), Walt Disney (DIS) and Occidental Petroleum (OXY).
With around 87% of the S&P 500 having reported March quarter earnings, collective profits are likely to rise 10.3% from last year to $450.3 billion before slowing to around $440.9 billion over the second quarter, according to Refinitiv forecasts.
In terms of individual stocks, Uber Technologies (UBER) shares were down 3.45%, and outpacing declines for the broader Nasdaq benchmark, following reports that the ride-sharing group will slow hiring and reduce its marketing costs.
Tyson Foods jumped 2.22% after it posted stronger-than-expected second-quarter earnings Monday, while boosting its full-year sales outlook, as the world's biggest food producer said solid global demand offset inflationary pressures across its supply chain.
Apple (AAPL) shares slumped 3.3% following reports of major disruptions at a key facility in Shanghai that supplies chips for the tech giant's MacBook computers.
