On Monday, the stock benchmarks were headed significantly lower as investors braced for a Federal Reserve gathering early this week that could set the tone for the rest of 2022, due to tensions on Russia over the military buildup on the border with Ukraine.
The S&P 500 index SPX was in jeopardy of closing in correction territory, with the broad-market index needing to close above 4,316 on Monday. It was 90 to avoid a 10% drop from its Jan. 3 record close.
After the recent downturn for stocks last Wednesday, the Nasdaq Composite Index COMP went into correction territory, which is a drop of 10% from a recent peak, with a bear market characterized as a decline of at least 20% from the recent high.
The rise in Treasury yields, with the Federal Reserve expected to announce plans to tighten monetary policy as it combats inflation, has buffeted assets considered speculative, including technology and growth-themed securities, as well as cryptocurrencies such asBTCUSD. The political environment is also a question mark, with U.S. and European diplomats meeting on how to respond to the threat posed by Russia to Ukraine. The Russian ruble RUBUSD fell to the lowest level in more than a year on Monday.
That dynamic was helping to deliver a further gut punch to bullish investors to start the week. Wall Street had enjoyed a period of solid gains in stocks, buoyed by fiscal and monetary incentives to help buffer against COVID-induced weakness, and that period of accommodative policies is likely to be retracted by the Fed, a blow to speculative fervor.
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Other major benchmarks were at risk of breaching key levels and even entering a bear market or correction.
As of Friday s close, the Dow Jones Industrial Average DJIA was off 6.9% from its Jan. 4 record close, with correction level at 33,119. The Russell 2000 index RUT was off 18.6% on Friday, with the index needing to stay above a close at 2,198.