Following the sharp pullback to close out the previous week, stocks showed another substantial move to the downside during trading on Monday.
With the continued sell-off, the tech-heavy Nasdaq tumbled to its lowest closing level since November 2020, while the Dow and the S&P 500 also hit one-year closing lows.
The major averages saw continued weakness going into the close, ending the session near their worst levels of the day. The Dow slumped 653.67 points or 2 percent to 32,245.70, the Nasdaq plummeted 521.41 points or 4.3 percent to 11,623.25 and the S&P 500 plunged 132.10 points or 3.2 percent to 3,991.24.
Significant weakness in overseas markets carried over onto Wall Street amid concerns about the outlook for the global economy.
Traders seem worried aggressive moves by global central banks to contain inflation could lead to a period of stagflation or an outright recession.
The extended sell-off on Wall Street also came as traders looked ahead to the release of key inflation data in the coming days.
The latest snapshot of inflation could impact expectations regarding how aggressively the Federal Reserve plans to raise interest rates.
Energy stocks turned in some of the market’s worst performances in afternoon trading, moving sharply lower along with the price of crude oil. Crude for June delivery plunged $6.68 to $103.09 a barrel.
Reflecting the sell-off in the energy sector, the Philadelphia Oil Service Index dove by 10.8 percent, the NYSE Arca Oil Index plummeted by 8.2 percent and the NYSE Arca Natural Gas Index tumbled by 6.7 percent.
Substantial weakness was also visible among airline stocks, resulting in a 7 percent nosedive by the NYSE Arca Airline Index. With the steep drop on the day, the index ended the session at a two-month closing low.
Biotechnology stocks also showed a significant move to the downside on the day, dragging the NYSE Arca Biotechnology Index down by 5.9 percent to its lowest closing level in over two years.
Gold, semiconductor, and commercial real estate stocks also saw considerable weakness on the day, reflecting broad based selling pressure on Wall Street.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday. Japan’s Nikkei 225 Index plunged by 2.5 percent, while South Korea’s Kospi tumbled by 1.3 percent.
The major European markets also showed significant moves to the downside on the day. While the French CAC 40 Index dove by 2.8 percent, the U.K.’s FTSE 100 Index and the German DAX Index slumped by 2.3 percent and 2.2 percent, respectively.
In the bond market, treasuries showed a notable turnaround after seeing initial weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.4 basis points to 3.079 percent after reaching a high of 3.167 percent.
Amid a quiet day on the U.S. economic front, trading on Tuesday may be impacted by reaction to comments by several Fed officials. Traders are also likely to keep an eye on the latest earnings news.
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