NEW YORK: Wall Street's main indices fell sharply yesterday, with the Nasdaq Composite confirming it was in a bear market, as the prospect of a ban on oil imports from Russia sent crude prices soaring and fuelled concerns about rising inflation.
Nasdaq ended down 20.1% from its Nov 19 record high close, confirming the tech-heavy index has been in a bear market since hitting that record high, according to a widely used definition. That marks the Nasdaq's first bear market since 2020, when the coronavirus outbreak crushed global economies.
The Dow Jones Industrial Average ended down 10.8% from its Jan 4 closing record high, confirming it was in a correction. A correction is confirmed when an index closes 10% or more below its record closing level.
The Dow fell 797.42 points, or 2.37%, to 32,817.38, the S&P 500 lost 127.79 points, or 2.95%, to 4,201.08 and the Nasdaq Composite dropped 482.48 points, or 3.62%, to 12,830.96.
Energy, the standout S&P 500 group so far this year, was one of the only sectors logging a gain on Monday, rising 1.6%.
“That concern on oil has led to concerns on higher inflation and potential for stagflation,” said Mona Mahajan, senior investment strategist at Edward Jones. “I think there is just a broader concern that there may be a hit to growth from the consumer given higher prices at the pump.”
Amazon, Microsoft and Apple were among the top individual drags on the S&P 500 while the financials sector fell 3.7%. The utilities sector , one of the defensive areas of the stock market, gained 1.3%.
“The market was already nervous about a Fed rate hike cycle,” said Burns McKinney, portfolio manager at NFJ Investment Group. “Now when you layer on higher energy prices on top of that... that has the investment community increasingly concerned that we may end up quickly moving toward the late stages of the market cycle.”