US Stocks Slide As Inflation Fears Spark Market Selloff
US Stocks Slide As Inflation Fears Spark Market Selloff...
The US stock market tumbled Monday as fresh inflation data reignited investor concerns about prolonged high interest rates. The S&P 500 dropped 1.8% in early trading, while the Dow Jones Industrial Average fell nearly 500 points - marking its worst single-day decline since October 2025.
Investors reacted sharply to Friday's Personal Consumption Expenditures report showing inflation rose 0.4% in February, exceeding economist forecasts. The Federal Reserve's preferred inflation gauge now shows prices up 2.8% year-over-year, stubbornly above the central bank's 2% target.
"This confirms the Fed's cautious approach was warranted," said Goldman Sachs chief economist Jan Hatzius. "Market expectations for rate cuts in June are evaporating fast." Treasury yields surged Monday, with the 10-year note hitting 4.35%, its highest level since November.
The tech-heavy Nasdaq Composite suffered the steepest losses, down 2.3% as megacap stocks like Apple (AAPL) and Nvidia (NVDA) led the decline. All 11 S&P 500 sectors traded lower, with real estate and utilities - typically interest-rate sensitive sectors - among the hardest hit.
Market volatility spiked, with the CBOE Volatility Index (VIX) jumping 18% to 22.6. Trading volume surged 40% above the 30-day average as institutional investors adjusted portfolios ahead of quarter-end. The selloff comes after stocks hit record highs earlier this month.
Retail investors appeared to be buying the dip, according to early data from Fidelity and Robinhood. However, professional traders warned the correction could deepen if upcoming jobs data shows continued labor market strength.
Federal Reserve Chair Jerome Powell is scheduled to testify before Congress on Wednesday, with markets keen for any signals about the timing of potential rate cuts. Analysts now see just a 35% chance of a June rate reduction, down from 65% last week according to CME FedWatch data.
The market turbulence comes amid growing consumer anxiety about prices. A new Gallup poll shows 63% of Americans name inflation as their top financial concern, the highest reading since 2008. Grocery prices remain 25% above pre-pandemic levels despite recent moderation in food inflation.
Energy stocks provided rare bright spots as oil prices climbed above $80 per barrel amid Middle East tensions. Exxon Mobil (XOM) gained 1.2% while Chevron (CVX) rose 0.8%. Defensive sectors like healthcare and consumer staples held up better than the broader market.
Market strategists advise caution in the near term. "We're telling clients to stay diversified and avoid timing the market," said Morgan Stanley wealth management head Lisa Shalett. "This volatility reflects healthy reassessment of risks, not systemic danger."
Futures trading suggests markets may stabilize Tuesday, with S&P 500 futures up 0.2% in pre-market activity. All eyes now turn to Friday's February jobs report, which could either calm or further fuel inflation worries.
