Dow Jones plunged by more than 1,000 points Monday, signaling investor worry over ballooning inflation, rising interest rates and tensions as Russia appears poised for a full-scale invasion of Ukraine.
The index dropped more than three percent, continuing its seven-day losing streak, which analysts blame on anticipated international conflict coupled with a higher cost of living.
The S&P500 also tested investor nerves as it fell for the fifth consecutive day and lost more than three per cent by midday. It is down more than 11 percent over the past month.
Stocks extended their three-week decline on Wall Street and put the benchmark S&P 500 on track to a so-called correction – a drop of 10 per cent or more from its most recent high.
Bitcoin was hit particularly hard by the market instability, at one point dipping below the $33,000 mark and slashing its value by more than half since its historic $68,990.90 high last November.
Within the past 24 hours, about $130 billion was lost in the cryptocurrency market, CNBC reported.
Monday’s market slump trailed last week’s poor performance, when Nasdaq posted its worst week since March 2020. The yield on 10-year Treasury notes also dropped, a sign of investor concern about the economy.
Stocks fell sharply during the first weeks of 2022 as the market readies for the Fed to raise interest rates to offset inflation; the central bank has kept short-term rates near zero since the pandemic hit the global economy in 2020.
A key Fed policy meeting this week will determine how aggressively the central bank seeks to hike interest rates.
It will on Wednesday release its new policy statement, and investors are worried it could include a number of interest hikes throughout the year as America grapples with record inflation.
Annual inflation hit seven percent in December – the highest increase since 1982 and Americans are feeling the pinch at the gas pumps, grocery stores, and more. The heightened cost of living has wiped out any salary increases Americans might have seen throughout the pandemic, making it more difficult for families to scrape by.
The S&P500 tumbled for the fifth consecutive day and lost more than three per cent by midday. It down more than 11 percent over the past month
Bitcoin was hit particularly hard by the market instability, at one point dipping below the $33,000 mark and slashing its value by more than half since its historic $68,990.90 high last November
Monday’s market slump trailed last week’s poor performance, when Nasdaq posted its worst week since March 2020. Traders are pictured at the New York Stock Exchange on January 21, 2022
Brutal drops in the market are also being triggered by worries that Russia will launch a full-scale invasion over Ukraine, trigging geopolitical conflict in the US, which has supplied Ukraine with boatloads of arms.
Sebastien Galy, senior macro strategist at Nordea Asset Management, said a conflict could lead to a market shakeup in the US – including by shutting Russian banks out of US’s financial system.
‘The closer you get to the cliff, the more nervous [the market] is,’ Galy told The Wall Street Journal. ‘We don’t have the information to trade.’
For some, the depressed market marked the early sign of a markets doomsday.
British investor Jeremy Grantham, a notorious life-long bear who persistently declares corrections are imminent, this week claimed that the US is in an asset ‘superbubble’ that will soon collapse spectacularly.
The tech-heavy Nasdaq, which has fallen for four straight weeks, was also down Monday when it lost more than 500 points,.
‘As always, once the volatility starts, investors pile on exacerbating the downward volatility,’ said Nancy Tengler, CEO of Laffer Tengler Investments.
The tech sell-off has hit the nation’s top tech billionaires hard, with Elon Musk, Jeff Bezos, Larry Page, Bill Gates and Mark Zuckerberg losing a collective $67 billion in the past week.
Telsa CEO Musk took the biggest hit, with his net worth dropping $25.1 billion, or more than 9 percent, on the week, according to the Bloomberg Billionaires Index.