U.S. stocks dropped Monday as investors looked ahead to the start of corporate earnings season this week and a bevy of new economic data as the Federal Reserve prepares to accelerate its moves to counter inflation.
The S&P 500 declined by 1.7% and added to last week’s losses. Nasdaq dropped more than 2% as technology stocks came under renewed pressure. Treasury yields climbed, and the benchmark 10-year yield rose above 2.7% to reach the highest level since January 2019.
Concerns over inflation, rising commodity prices amid Russia’s war in Ukraine, and the Federal Reserve’s monetary policy path forward remained at the center of investors’ attention. On Tuesday, traders are set to receive the latest Consumer Price Index from the Bureau of Labor Statistics, which is expected to show a staggering 8.4% year-over-year increase in prices for the biggest leap since 1982.
And this comes as Fed officials have increasingly talked of larger-than-average 50 basis-point interest rate hikes this year to help bring down prices. Last week, the Fed’s March meeting minutes also showed the central bank was gearing up to begin rolling off assets from its $9 trillion balance sheet, in a further move removing financial market support and pivoting away from pandemic-era accommodative policies.