Stock markets fell into bear territory on Monday, continuing a sell-off that began last week on news that inflation had reached a new 40-year high of 8.6 percent.
The Dow Jones Industrial Average of major U.S. stocks dropped nearly 600 points, or 1.8 percent, in the first 30 minutes of trading on Monday. The S&P 500 index fell more than 2.5 percent to hit 3,800, its lowest point since early 2021.
Friday’s new high-water mark in the consumer price index was a major blow to investor confidence, indicating that prices, which have risen as most pandemic-related restrictions have been lifted, have yet to hit a ceiling and could continue to rise.
Sentiment on Wall Street and in the broader economy is low: The University of Michigan’s index of consumer sentiment dropped 8 points from May to June, and measures of economic conditions and consumer expectations also saw steep decreases.
Earlier this month, JPMorgan Chase CEO Jamie Dimon said he predicted a coming “hurricane” in the economy and told investors to brace themselves.
To rein in inflation, the Federal Reserve has started to raise interest rates and sell off some of its assets, moves that are designed to cool off an overheating economy and decrease prices. These increases are also spurring on the current market sell-offs.
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Markets enter bear territory with Monday sell-off https://t.co/RX8JrVu6Oa pic.twitter.com/xTfAucDmA8
— The Hill (@thehill) June 13, 2022
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