Stocks opened sharply lower and the S&P 500 (SPX), the broadest measure of the US equity market, was on track to end the day in correction territory, defined as a 10% drop from its most recent peak.
The S&P 500 was trading 2.7% lower shortly after Monday’s opening bell. Last week, the index logged its worst week since March 2020.
The Dow (INDU) fell more than 730 points, or 2.2%.
Investors have a lot on their plate this week.
Earnings season has moved on to big tech, including Microsoft (MSFT), IBM (IBM), Intel (INTC) and Apple (AAPL), which report results this week.
Then there’s the Fed meeting, concluding with Wednesday’s policy statement and subsequent press conference. As of Monday morning, market expectations for this week are that the central bank will keep interest rates near zero for a little longer, according to the CME FedWatch tool. But for the next meeting, which isn’t until March, expectations of a quarter-percentage-point rate hike are above 80%.
Expectations are only part of the game. The Fed could also conclude that inflation has run too hot at the end of 2021 and crank up rates more — or sooner.
Treasury yields, which track interest rate expectations, were off last week’s highs Monday. The 10-year bond yielded 1.72% Monday morning after climbing past 1.8% for the first time since before the pandemic last week.
Making matters worse, investors are anxiously watching the situation in Ukraine as fears mount that the country could be invaded by Russia.
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