NEW YORK – The US markets are in extreme flux at the moment as US stocks plunged into bear market territory Monday morning. Wall Street investors are growing increasingly nervous about the prospect of even more harsh interest rate hikes from the Fed in an attempt to slow the rate of inflation.
The Fed is expected to raise its interest rate to 1.25%-1.50%, after a similar move last month.
The Dow (INDU) sank 825 points, or 2.7%, and the Nasdaq fell 4.3%.
The broader S&P 500 fell 3.6%. That index is now more than 20% below its all-time high set in January.
Monday’s sell-off was far-reaching. Roughly 26 New York Stock Exchange-listed stocks trading lower.
Shares of Boeing, Dow, Salesforce and Chevron fell more than 8%, 6%, 5.9% and 5%, respectively, dragging down the Dow. Beaten-up tech shares also took a hit with Netflix, Amazon and Nvidia down more than 6% as the Nasdaq touched a fresh 52-week low and its lowest level since November 2020, CNBC reports.
Travel stocks also slipped on Monday, with Carnival Corporation and Norwegian Cruise Line down about 10% each. Delta Air Lines and United also fell more than 7% and 9%, respectively.
All major S&P 500 sectors dipped into the red, with energy down more 6%. Consumer discretionary, real estate and materials also slipped more than 4%.
The same fears are sending Bitcoin, Ethereum, BNB, Solana, Cardano, XRP, Dogecoin, Polkadot, Tron, And Avalanche Into a free fall.
“The Federal Reserve is backed into a corner now,” crypto investor and influencer Anthony Pompliano wrote in his newsletter after the latest inflation data was released.
“Inflation hasn’t subsided even though the Fed has been increasing interest rates and conducting quantitative tightening. They don’t have many more options other than to simply put their foot on the gas. The Fed could try to accelerate the interest rate increases, both in speed and severity, along with accelerating quantitative tightening. I’m not sure that they will do it, but there aren’t many other avenues to pursue,” he wrote.
Hold on, it’s about to get worse.
According to CNBC, these are the three main reasons that the crypto market is crashing:
- Runaway inflation: Inflation is at a 40-year high, sending prices for some everyday goods skyrocketing. When inflation rises, consumers tend to pull back on spending because their money doesn’t go as far as it used to. This reduced consumer spending spooks the markets, which usually causes investors to flee riskier investments. You can’t get much riskier than cryptocurrencies.
- A hammered Nasdaq: Last week the Nasdaq got hammered—mainly due to those inflationary fears and expected interest rate hikes from the Federal Reserve. As CNBC notes, when U.S. indices like the Nasdaq take a beating, crypto markets usually follow suit.
- Celsius: This is the wildcard on this list. A crypto lending company by the name of Celsius announced this morning that it was pausing the ability of its users to withdraw or transfer their coins due to “extreme market conditions.” When a platform does something like this, investors get worried that others may follow suit, causing a run on the markets, and they rush to sell their coins before the floor drops out. As is completely understandable, Celsius users on Twitter are furious.
“Since Nov 2021, sentiment has changed drastically given the Fed rate hikes and inflation management. We’re also potentially looking at a recession given the FED may need to finally tackle the demand side to manage inflation,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC.
“All this points to the market not completely having bottomed and unless the Fed is able to take a breather, we’re probably not going to see bullishness return.”