(Bloomberg) -- US stocks fell in early trading as investors weighed how inflation and hawkish central bank policy will erode corporate earnings and economic growth.
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The selloff in stocks gathered pace, sending the S&P 500 down more than 1% to the lowest intraday level since November 2020, surpassing the previous low reached in September. The Nasdaq 100 sank more than 1.5%. Meta Platforms Inc. dropped with other big tech names sensitive to rising rates. In Europe, the Stoxx 600 index fell for the fifth day, with energy and tech stocks underperforming.
The dollar gained while Treasuries were mixed, with yields backing off from multiyear highs.
The mood remains fragile after a four-day losing streak wiped $1.6 trillion off the value of the S&P 500 Index. US inflation data, due Thursday, could seal the case for another 75 basis-point interest rate increase, should it come in higher than expected. Nor have Federal Reserve officials shown any inclination to pause their rate-hiking cycle in the near future.
Strategists are also bracing for weak profits against a drumbeat of warnings over the rising risk of a global recession. The International Monetary Fund joined the refrain, warning of a worsening outlook as efforts to curb inflation may add to damage from the war in Ukraine and China’s slowdown. Big US banks kick off the third-quarter earnings season in earnest later this week.
“We have not seen the impact of tightening,” Michael Kelly, head of the multi-asset team at PineBridge Investments told Bloomberg TV. “That lies ahead and when we see that, it’s another leg down for risk assets.”
Yields on two-year Treasuries slipped to around 4.3% after earlier hitting the highest since 2007. The 30-year yield earlier surged to the highest since 2014.
Turmoil in UK bond markets eased Tuesday as the Bank of England was forced to expand its emergency measures to tackle what it called “fire-sale dynamics.”
Meanwhile, Russian President Vladimir Putin threatened further missile attacks on Ukraine after hitting Kyiv and other cities in the most intense barrage of strikes since the first days of its invasion.
“It’s little wonder investors enter the week in a dreary mood, especially with headlines from Ukraine signaling a further escalation in geopolitical tensions,” Christopher Smart, chief global strategist at Barings, said in a note.
With world growth under pressure, US oil futures tumbled about 2%, giving up more of last week’s 17% rally.
Key events this week:
Earnings this week include: JPMorgan Chase & Co., Citigroup Inc., Morgan Stanley, BlackRock Inc., Delta Air Lines Inc., UnitedHealth Group Inc., U.S. Bancorp, Wells Fargo & Co.
Fed’s Loretta Mester speaks, Tuesday
BOE’s Andrew Bailey speaks, Tuesday
FOMC minutes for September meeting, Wednesday
US PPI, mortgage applications, Wednesday
OPEC Monthly Oil Market Report, Wednesday
Fed’s Michelle Bowman and Neel Kashkari speak
ECB’s Christine Lagarde speaks
US CPI, initial jobless claims, Thursday
G-20 finance ministers and central bankers meet, Thursday
China CPI, PPI, trade, Friday
US retail sales, business inventories, University of Michigan consumer sentiment, Friday
BOE emergency bond buying is set to end, Friday
Some of the main moves in markets:
Stocks
The S&P 500 fell 1.1% as of 10:08 a.m. New York time
The Nasdaq 100 fell 1.6%
The Dow Jones Industrial Average fell 0.4%
The Stoxx Europe 600 fell 1.2%
The MSCI World index fell 1.5%
Currencies
The Bloomberg Dollar Spot Index rose 0.2%
The euro was little changed at $0.9693
The British pound was little changed at $1.1047
The Japanese yen was little changed at 145.78 per dollar
Cryptocurrencies
Bitcoin fell 1.7% to $18,922.98
Ether fell 2.5% to $1,274.79
Bonds
The yield on 10-year Treasuries advanced eight basis points to 3.96%
Germany’s 10-year yield advanced two basis points to 2.36%
Britain’s 10-year yield advanced one basis point to 4.49%
Commodities
West Texas Intermediate crude fell 2.7% to $88.64 a barrel
Gold futures were little changed
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