Dow plunged more than 550 points as inflation fears rattle investors

The daw (UNDUE) It fell nearly 600 points at its lowest level, and ended the day 569 points, or 1.6%, down. The Standard & Poor’s 500 (SPX) closed down 2%. Tech stocks led losses across the board, focus on technology Nasdaq Composite (COMP) It ended down 2.8%.

The S&P recorded its worst session since May, while the Nasdaq had its worst day since March. For the Dow, this was only the worst drop since last week’s sell-off.

“It’s a rather low-key tantrum,” said Ed Yardeni, Yardeni’s head of research.

The 10-year Treasury yield, which is affected by inflation expectations, It rose to 1.54% around the time the closing bell. Bond yields and prices move in opposition to each other.

Notes about inflation From Federal Reserve Chairman Jerome Powell spooked investors this morning and pushed bond yields higher.
“Inflation is high and will likely remain so in the coming months before it subsides,” Powell said. prepared notes Before the Senate Committee on Banking, Housing, and Urban Affairs.

“The supply-side constraints that are at the core of the inflation we’re seeing … have in some cases gotten worse,” Powell told lawmakers at the hearing.

High levels of inflation over the summer have convinced economists and investors that the Fed will soon squeeze the brakes with its massive monetary stimulus program. last week, Powell said The central bank was almost there and this is “a moderation of pace [monthly] An asset purchase may be warranted soon.”

The stock market reacted little at the time, with comments in line with expectations, but Tuesday’s sell-off may still relate to tapering, the Fed’s operation to scale back its monthly purchases.

Debt ceiling discussion

Powell and Treasury Secretary Janet Yellen testified before Congress on Tuesday about the pandemic and the CARES Act.

Yellen told lawmakers that The government will run out of cash She faces unusual measures By October 18 If Congress does not raise the debt ceiling.

“Both Democratic and Republican administrations have failed,” Yellen said. “It’s important to realize that.” This means that paying the bills for those deficits is a joint responsibility and should not be the responsibility of any party.”

While policymakers in Washington are busy, American consumer confidence is on the rise. The Conference Board’s index of consumer confidence fell for the third month in a row in September, said Lynn Franco, director of economic indicators at the Conference Board, “as the spread of the delta variable continued to dampen optimism.”

It’s not just stocks, bonds, and the economy that makes investors uncomfortable.

There is also turmoil in the energy market, with prices rising. One of the issues is a shortage of natural gas Due to lower inventories and increased demand as production activity picks up from the Covid-19 lull. October natural gas futures rose 3% around the time the stock market closed.

CNN’s Matt Egan and Julia Horowitz contributed to this report.

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