The S&P 500 entered correction territory on Monday following Wall Street’s worst week since the start of the pandemic.
The S&P 500, which is heading for its worst month since March 2020, closed up after a tumultuous day for the markets in which the index entered correction territory, meaning that it was more than 10% off from its record closing high earlier this month. The Dow Jones Industrial Average, which at one point was down more than 1,000 points on Monday, staged a late-day rebound, turning positive and closing slightly up after a wild intraday swing.
The tech-heavy Nasdaq remained in correction territory but closed up more than 0.6%.
The day’s downward swings showed that investors are retreating from assets like equities amid anxiety about the Federal Reserve raising interest rates and uncertainty about the geopolitical situation in Ukraine.
BIDEN INFLATION AND ECONOMIC WOES UNLIKLEY TO BE FIXED IN TIME FOR MIDTERM ELECTIONS
At one point on Monday, the Cboe Volatility Index, often referred to as the fear index, was up more than 31%, its highest level since the thick of the coronavirus pandemic in November 2020.
The central bank’s Federal Open Market Committee, which sets interest rates, is meeting on Tuesday and Wednesday and is widely expected to announce the first rate hikes since 2018 following the huddle.
During the FOMC’s last meeting, participants indicated about three rate hikes during 2022 as means of combating inflation. Since that meeting, though, investors have expected the Fed to take on an even more aggressive monetary policy in order to stave down higher prices.
Jamie Dimon, the chairman and CEO of JPMorgan Chase, said this month that he would be “surprised” if the Fed only hikes interest rates four times.
Further compounding market jitters is the situation in Ukraine, where fear of war with Russia has been growing every day. Over the weekend, the State Department ordered the families of all personnel at the U.S. Embassy in Ukraine to depart the country given the developments. It also said that nonessential staff could voluntarily leave Ukraine at government expense.
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“As President [Joe] Biden has said, military action by Russia could come at any time,” a senior State Department official told reporters on Sunday evening. “The United States government will not be in a position to evacuate U.S. citizens in such a contingency.”
Bitcoin and cryptocurrencies also had a bad Monday, with the flagship digital asset dropping to just above $33,000 — half of what it was just months ago in October.
