4:09pm: Dow bleeds nearly 900 points
The Dow ended Monday down 875 points, 2.8%, at 30,517, the Nasdaq Composite fell 531 points, 4.7%, to 10,809 and the S&P 500 lost 151 points, 3.9%, to 3,750.
The broad selloff dragged the S&P 500 to a new 2022 low, and the benchmark closed in bear market territory after finishing more than 20% off its record high.
All eyes are on the Federal Reserve, which is scheduled to meet on Tuesday and Wednesday, in anticipation of additional interest rate hikes. .
12.10pm: Bitcoin value takes significant hit
At noon, the Dow Jones Industrial Average was down 668 points, 2.1%, to 30,725, the Nasdaq Composite was 433 points lower, 3.8%, at 10,908 and the S&P 500 declined 118 points, 3%, to 3,783.
For the S&P, that total is about 20% below its all-time high, which would push the benchmark into bear market territory if it holds for the remainder of the session.
Investors have reacted negatively to the May Consumer Price Index report released Friday, which showed that inflation hit 8.6% last month.
"The US market has resumed its downward trend today as concerns mount that the Fed might quicken the pace of interest rate rises," Jason Hollands, managing director of Bestinvest, wrote Monday. "The Fed is expected to raise rates by 50 [basis points] this week at its 16 June meeting, but there is an outside chance it may go further with a 75 bps hike."
Meanwhile, in the crypto sector, bitcoin has taken a beating. The cryptocurrency was down more than 16% to $23,350.50.
10.55am: Proactive North America headlines:
Aftermath Silver (TSX-V:AAG) hits high-grade silver and copper at its Berenguela project in Peru
Canaccord Genuity (TSX:CF, LSE:CF) repeats 'Speculative Buy' rating and $1.00 price target on Small Pharma following publication of its full-year results
Snowline Gold encouraged by early findings of first 2022 hole drilled at Valley zone at Rogue project in the Yukon
Sonoro Gold unveils final drill results from Phase 4 campaign at Cerro Caliche gold project in Mexico
Silverton Metals announces appointment of Lowell Kamin as CEO and director
Quebec Nickel updates on exploration work at its Ducros property; reveals summer field program
AIM ImmunoTech boosts intellectual property with new Netherlands utility patent covering Ampligen and dsRNA products aimed at COVID-19
MGX Minerals proposes mine to market solar energy program for Canada
Kenorland Minerals seeing encouraging drill results from its Regnault discovery on the Frotet project
Cypress Development delivers concentrated lithium solution to two Canada labs for further testing
Pacific Empire Minerals closes acquisition of Col property in British Columbia
Ortho Regenerative Technologies fully activates half of clinical sites in upcoming rotator cuff repair trial
Copper Fox Metals set to kick off drilling at its Eaglehead project in British Columbia
PlantX Life announces monthly gross revenue of $1.54M for May 2022 as it builds towards profitability
Todos Medical says lab Provista to launch UTI pathogen PCR assay commercially
Aurion Resources (TSX-V:AU) reveals new high-grade gold results from winter drilling program at Helmi
Electric Royalties to acquire gross revenue royalty on World Copper's Arizona copper oxide project
Goldshore Resources kicks off drilling in the Coldstream region of its Moss Lake project in Ontario
African Gold Group poised to change name to Toubani Resources Inc on June 15
Ridgeline Minerals (TSX-V:RDG, OTCQB:RDGMF) says first holes at flagship Selena project in Nevada intersected silver-gold-lead-zinc mineralization
Empower Clinics says revenue growing as healthcare practice in Vancouver expands dramatically
Reunion Gold finds 'significant' depth extension with ongoing drilling at Oko West in Guyana
NioCorp Developments announces C$4.35M non-brokered private placement
CULT Food Science Corp joins Newlab in venture to identify new businesses in cellular agriculture
Nickel North Exploration (TSX-V:NNX) posts mineral resources update; invites investors to visit company booth at PDAC
Benchmark says increase in overall gold ounces further de-risks flagship Lawyers gold-silver project
Thesis Gold announces new discovery near Bingo occurrence at Ranch project in BC's Golden Horseshoe
MBH Corporation hires paralympian Neil Fachie as board apprentice
Numinus Wellness completes acquisition of Novamind; announces executive team expansion
Aftermath Silver (TSX-V:AAG) agrees to sell Cachinal De La Sierra Silver-Gold Project in Chile to Honey Badger Silver
Jushi Holdings is building out its portfolio of premium cannabis assets as US consumer appetites grow
Canada Silver Cobalt resumes drilling at its electric vehicles battery metals Graal property in northern Quebec
9.40am: High inflation fuels sell-off
US stocks opened lower on Monday as inflationary pressures weigh on investor sentiment ahead of the Fed's upcoming meeting where its latest monetary policy verdict will be revealed.
Just after the open, the Dow had plunged 601 points or 1.9% to 30,792 points.
The S&P 500 shed 94 points or 2.4% at 3,807 points and the Nasdaq fell 348 points or 3.1% at 10,991 points.
City Index and FOREX.com market analyst Fawad Razaqzada said the cause of the sell-off came down to very hot inflation.
“This is causing panic among global central banks, as they rush to tightening their policies in order to help bring price levels down,” he said. “Investors, in turn, are seeing their portfolios suffer sizable losses, causing them to reduce their risk, which is further fuelling the sell-off.”
6.30am: Rough times ahead
US markets were expected to open lower on Monday as investors digest the spike in the headline inflation figure from last week and brace for a further interest rate increase when the US Federal Reserve's latest policy meeting verdict is revealed on Wednesday.
While a 50 basis point increase is widely priced in, investors are wary of the possibility of a larger rate hike as price pressures have clearly not reached their peak as of yet.
Futures for the Dow Jones Industrial Average fell 1.8 % in pre-market trading, while those for the broader S&P 500 index slumped 2.3%, and contracts for the Nasdaq-100 were down 2.9%.
On Friday, the US consumer price index hit a 41-year high in May, beating expectations to accelerate to 8.6% amid surging energy and food prices.
The data dented hopes that inflation had peaked and revived the hawkish expectations that the Fed should get more aggressive if it wants to take control of inflation, said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“On Wednesday, the FOMC (Federal Open Market Committee) is expected to raise the interest rates by another 50 basis points, yet the possibility of a 75-basis-point hike is now being priced in," she said, noting that ahead of the inflation data, activity on Fed funds futures assessed around a 5% chance of a 75-basis point hike at this week’s meeting but now they are pricing in a 23% chance.
The likelihood of large back-to-back rate hikes is also creeping higher, adding to the overall cautiousness in equities.
“(T)he chance of a 75 basis point hike in July meeting is now more than 50%, and the market even gives a 14% chance for a 100 basis point hike. This is how hawkish the Fed expectations got following Friday’s unfortunate CPI read,” added Ozkardeskaya.
Against this backdrop, the yield on benchmark US 10-year Treasuries continues to climb, signaling that stock markets may be in for a fresh round of falls.
“The unexpected U-turn in US inflation number also removed the 3% speed bump on the US 10-year yield. The 10-year yield shot up to 3.20% this morning, and the 2-year yield hit 3.19%. We shall see a further selloff in the US short and long-term treasuries on revived hawkish Fed expectations into Wednesday’s FOMC decision,” said Ozkardeskaya.
In energy markets, WTI crude oil futures shed 1.7% to $118.62 a barrel and Brent crude futures fell 1.6% to $120.03.
Contact the author at jon.hopkins@proactiveinvestors.com