With the inflation increasing everywhere and economies struggling with coping up with issues, the S&P 500 tipped into the bear market territory, lifted bond yields and dragged down cryptocurrencies and other holdings. The S&P fell 2.4% on Monday afternoon, the market is on a verge to fall in the bear market for the first time since 2020.
The US consumer prices rose 8.6% year – over – year in May, the fastest such rise since 1981. The report forced many to reset expectations for higher interest rates from the Federal Reserve.
“The very fact that it overshot expectations has really frayed investors’ nerves even more and shown how difficult it is to try to keep a lid on inflation,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, “The worry is that inflation is getting too hot to handle for central banks and they’ll have to dose economies with cold water in the form of tighter policy.”
The Fed meeting of two day policy will start on Tuesday. US tech stocks, which suffered through the entire pandemic, were set for big declines Monday. Apple shares were down 2%, while Amazon lost 5.6%. Chip maker Nvidia lost 6.4% and Tesla was cut down by 4.5% and Meta lost 4.6%.
“This is what you call a bear market where fear is taking place and pushing people out of the market and having people empty up portfolios and capitulate,” said Todd Morgan, the chairman of Los Angeles – based Bel Air Investment Advisors.
