The S&P 500 hit a new closing low of 2022 and the Dow Jones Industrial Average slid into a bear market as rising interest rates and turmoil rocked global currencies.
The S&P 500 fell 1.03% to 3655.04, down from its June closing low of 3666.77. At some point during the day, the index fell to 3,644.76, down eight points from its intraday low for 2022: 3636.87.
The Dow Jones fell 329.60 points, or 1.11%, to 29,260.81 – accelerating from losses in the last moments of trading. The 30-share index is down about 20.4% from its January 4 closing high. The Nasdaq Composite Index fell 0.6 percent to 10802.92 points.
British pound dropped to a record low On Monday against the US dollar, it fell 4% at one point to an all-time low of $1.0382. Since then, the pound has retreated from its worst levels amid speculation that The Bank of England may have to raise interest rates more aggressively to curb inflation.
The Fed’s aggressive hike campaign, along with the UK tax cuts announced last week, have caused the US dollar to rise. The euro has reached its lowest level against the dollar since 2002. An appreciation of the US currency can hurt the profits of US multinationals, as well as wreak havoc in global trade, much of which is traded in dollars.
“This dollar strength has historically led to some kind of financial/economic crisis,” Michael Wilson, chief US equity analyst, wrote in a note. “If ever there was a time to look for something to break, this would be it.”
Bond yields jumped Monday, with the 10-year Treasury yield rising to 3.9% at one point on the day. This is the highest level since 2010.
The yield on two-year Treasuries, which are particularly sensitive to Fed policy, also jumped. The rate on the note exceeded 4.3%, the highest level since 2007.
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