Markets Selloff, Bringing S&P 500 into Bear Market…..

U.S. equities finished solidly lower, adding to the sharp drop seen last week following Friday’s hotter-than-expected consumer price inflation report. The crypto markets also contributed to the selloff as Bitcoin tumbled to an 18-month low. Today’s weakness brought the S&P 500 into bear market territory to join the NASDAQ Composite and Russell 2000. Further, concerns about a possible recession amid expectations of more aggressive Fed monetary policy remained, exacerbated by a brief inversion of the 10-year and 2-year Treasury yield spread, which is often viewed as a recession signal. The Fed is expected to further hike rates later this week, while the Bank of England and Bank of Japan are also set to meet regarding monetary policy. The ongoing war in Ukraine also remained a headwind. In M&A news, real estate investment trust Prologis announced an all-stock deal to acquire Duke Realty in a transaction valued at nearly $26 billion. The economic calendar was dormant today but will heat up tomorrow with a key reading on wholesale prices. Treasuries fell, pushing yields sharply higher, with the curve flattening further. The U.S. dollar rallied, crude oil prices settled with a slight gain after choppy trading, and gold plunged. European equities were markedly lower and Asia saw widespread losses amid the global uneasiness.

The Dow Jones Industrial Average tumbled 876 points (2.8%) to 30,517, the S&P 500 Index dropped 151 points (3.9%) to 3,750, and the Nasdaq Composite plunged 531 points (4.7%) to 10,809. In heavy volume, 5.6 billion shares of NYSE-listed stocks were traded, and 5.8 billion shares changed hands on the Nasdaq. WTI crude oil moved $0.26 higher to $120.93 per barrel. Elsewhere, the gold spot price plunged $50.40 to $1,825.10 per ounce, and the Dollar Index rallied 1.0% to 105.18.

Treasuries were noticeably lower, with the yield on the 10-year note flirting with 10 year highs, and the yield on the 2-year note hitting levels not seen since 2007. In addition, the spread between the two briefly inverted this morning amid the continued choppy action in the bond markets. The moves came as the markets continue to grapple with the implications of more aggressive Fed monetary policy amid the backdrop of slowing economic growth.

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