S&P 500 sinks 3.9%, ending in 'bear market'

Xinhua

Wall Street stocks officially entered "bear market" territory on Monday following another drubbing as investors bet on more aggressive Federal Reserve rate hikes to address inflation.

The S&P 500, the broad-based equity index, plummeted 3.9 percent to finish the day at 3,749.53, a drop of more than 20 percent from its most recent peak on January 4 – the definition of a bear market.

The Dow Jones Industrial Average lost 2.8 percent to end at 30,516.74, while the tech-rich Nasdaq Composite Index fell 4.7 percent to 10,809.23.

It was Wall Street's fourth straight day of losses and comes ahead of Wednesday's Fed decision.

More market watchers believe the US central bank will need to ratchet up its monetary tightening in light of Friday's consumer price index report.

CPI jumped 8.6 percent compared with May 2021, hitting a fresh 40-year high, topping expectations and dashing hopes that price pressures had peaked.

The Fed has signaled plans for a second large 0.5 percentage point interest rate hike on Wednesday.

But more voices are projecting a three-quarter point increase. Barclays said the more aggressive move was called for "to reinforce credibility and get ahead of inflationary pressures."

The Fed's increasingly aggressive posture "is causing indigestion for the markets," said Angelo Kourkafas, investment strategist of Edward Jones.

The concerns sent the yield on the 10-year US Treasury note, a proxy for interest rates, above 3.3 percent, the highest level in more than 11 years.

All 11 sectors of the S&P 500 finished with losses of more than 2 percent. Among large companies, Apple fell 3.8 percent, Disney lost 3.7 percent and Boeing slumped 8.9 percent.