U.S. stock markets market mayhem continued on Monday as three major stock indexes ended deep in negative zone. Mounting inflation with a record-high level and a more-than hawkish Fed have significantly dented market participants’ confidence on risky assets like equities. The S&P 500 Index finished the session in bear market territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) tumbled 2.8% or 876.05 points to close at 30,516.74. .Notably, 29 components of the 30-stock index ended in negative territory while just one kin green. The blue-chip index is down about 17% year to date and closed below its strong technical barrier of 31,000.

The tech-heavy Nasdaq Composite finished at 10,809.23, sliding 4.7% or 530.80 points due to the disappointing performance of large-cap technology stocks. The tech-laden index is down around 30% year to date and closed below its strong technical barrier of 11,000. The index is in bear market since Mar 7.

Meanwhile, the S&P 500 tanked 3.9% or 151.23 points to end at 3,749.63. The broad-market index is down 21% year to date and officially entered a bear market territory.  All 11 broad sectors of the benchmark index closed in negative zone and only 5 components of the 500 bunch ended in green. .

The Communication Services Select Sector SPDR (XLC), the Energy Select Sector SPDR (XLE), the Real Estate Select Sector SPDR (XLRE), the Consumer Discretionary Select Sector SPADR (XLY), the Technology Select Sector SPDR (XLK) and the Utilities Select Sector SPDR (XLU) slumped 4.7%, 5.2%, 4.8%, 4.6%, 4.4% and 4.6%, respectively.

The major loser of the market’s benchmark was Signature Bank (SBNY Quick QuoteSBNY - Free Report) , shares of which tumbled 13.7%. Signature Bank carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The fear-gauge CBOE Volatility Index (VIX) was up 22.6% to 34.02. A total of 12.21 billion shares were traded Friday, higher than the last 20-session average of 11.9 billion. Decliners outnumbered advancers on the NYSE by a 8.2-to-1 ratio. On Nasdaq, a 6.4-to-1 ratio favored declining issues.  

Alarming Inflation Data

The Department of Labor reported that the consumer price index (CPI) – popularly known as household inflation – rose 1% in May compared with 0.3% in April. The consensus estimate was 0.7%. The core CPI (excluding volatile food and energy items) was up 0.6% in May in line with the previous month. The consensus estimate was 0.5%.

Year over year, CPI jumped 8.6% in May compared with 8.3% in April. May’s reading was the highest since December 1981. The core CPI climbed 6% year over year in May, exceeding the consensus estimate of 5.9%. However, April’s reading was 6.2%.

Fed’s June FOMC in Focus

The Fed is scheduled to meet for its next FOMC on Jun 14-15. The Fed Chairman Jerome Powell announced in May FOMC statement that the central bank will raise the benchmark interest rate by 50 basis points in both June and July.

However, On Jun 13, the Wall Street Journal reported that the Fed officials are seriously considering to hike the lending rate by 75 basis points in June and July in order to combat mounting inflation. The Fed raised the Fed Fund rate by 25 basis points in March and 50 basis points in May.

The central bank has terminated the $120 billion per month quantitative easing program in March and started systematically reducing the size of its $9 trillion balance sheet since Jun. Yet, inflation data are showing no signs of abatement.

On Jun 13, the yield on the benchmark 10-Year U.S. Treasury Note registered its biggest single-day jump to close at 3.367% after hitting 3.4% in the intraday session. The yield on the short-term 2-Year U.S. Treasury Note closed at around 3.3%. In the pre-market trading, the two yields inverted briefly, which some economists consider as an indication of an impending recession.