So much for turnaround Tuesday on Wall Street. Stocks fell after rallying at the open, signaling that the market could extend its five-day losing streak and pushing the Dow further into bear territory.
The Dow fell about 250 points, or 0.9%, in midday trading. The S&P 500 was down 0.7% while the Nasdaq Composite dipped 0.3%.
The Dow and S&P 500 on Monday hit their lowest levels since November and December 2020, respectively.
The British pound rebounded by about 1% Tuesday after reaching a new record low against the US dollar Monday.
The Federal Reserve’s aggressive rate hiking policy and Britain’s recently announced tax cuts have caused the dollar to surge. But investors are worried about the dollar’s rally, Societe Generale’s Kit Juckes noted Monday, as large surges historically occur alongside global economic crises.
Investors are also grappling with continued concerns about inflation and the likelihood that the Fed will keep raising rates sharply for the foreseeable future.
“Fed members are all singing from the same hymn book. They are willing to weaken the economy to bring inflation in check,” said Alex Chaloff, co-head of investment strategies at Bernstein Private Wealth Management. “They are saying it over and over and over again because, up until ten days ago, the market didn’t believe them.”
Inflation and rate hike jitters pushed the yield on the benchmark 10-year Treasury closer to 4%, a level it hasn’t traded at in more than a dozen years. The 10-year yield stood at about 3.98% Tuesday, its highest point since April 2010.