S&P 500 Sinks to Bear Territory, Nasdaq Extends Losses

Barry Adams
13 Jun, 2022
New York City

Market jitters continued for the third day in a row ahead of the rate decision on Wednesday. 

Futures of the S&P 500 index declined 2.4% to 3,806.50 and the Nasdaq Composite index fell 2.9% to 11,523.50. 

Stocks extended losses for the third day in a row and the S&P 500 index dropped to bear market mark after the latest inflation data showed no signs of abating and the Fed has a long road ahead in catching up with inflation. 

Risky assets were hit hard and bitcoin plunged 14% to $23,582 according to the price data available on CoinDesk.  

Bitcoin declined for the 12 weeks in a row from its high near $49,000 in March.  

Coinbase Global plunged 21.4% to $46.24 after the continued weakness in the largest cryptocurrency bitcoin. 

Markets are looking ahead to interest rate decisions from several central banks this week. 

The rate decisions are expected from the U..S. Federal Reserve and the Banco Central Do Brasil on Wednesday, from the Bank of England on Thursday, and from the Bank of Japan and Swiss National Bank on Friday. 

The faster than expected inflation dashed hopes of peaking inflation and raised expectations that the interest rates may be raised higher-than-expected 50 basis points after a two-day meeting on Wednesday. 

The Federal Reserve has signaled a 50 basis points interest rate increase at its next meeting this week and in late July. 

The yen extended its year-long decline and fell to 135.20  against one dollar before recovering to close at 134.60 as the rate gap widens between the yen and the U.S. dollar.  

The rupee edged to record low 77.81 on the rising worries that higher U.S. interest rates may accelerate selling by international investors. 

Asian market plunged after the U.S. inflation accelerated and fueling worries of faster rate hikes. The yen dropped to a 23-year low on widening rate gap between Japan and the U.S. Indexes in China declined after Beijing reimposed stricter controls in several parts of the city. 

The Nikkei index plunged 3.01% to 26,987.44, the Hang Seng index declined 3.4% to 21,067.58, and the Kospi index dropped 3.5% to 2,504.51, a 19-month low. 

Market indexes in Frankfurt and Paris dropped 2% and in London declined 1.7%.  

The Sensex index dropped 1,456.74 or 2.7% to 52,846.70 and the Nifty 50 index plunged 2.6% or 427.40 to 15,774.40. 

The Australian markets were closed for a holiday and the New Zealand index dropped 1.9%, the largest one-day decline in four months and fell to its lowest level in two years. 

The Japanese government 10-year bonds yield rose to 0.255%, a six-year high and above the cap set by the central bank, ahead of the interest rate decision by the Bank of Japan on Friday. 

The business survey index of large businesses declined to -9.9 in the quarter to June compared to -7.6 in the three-month period to March.   

The joint survey by the Finance Ministry and the Cabinet Office showed negative sentiment deepened among businesses after the Ukraine war dragged on and China lockdowns continued. 

The sentiment in the automobile industry fell to -25.4 on the persistent global supply chain worries.