U.S. markets tumbled sharply before the opening bell Monday with the S&P 500 pointing to bear territory amid seeping pessimism over stubborn, four-decade high inflation.
Futures for the Dow Jones industrials lost more than 500 points, or 1.7%, while futures for the S&P fell 2.2%, or 91.50, to 3,809. That’s a decline of more than 20% since Jan. 3 and if it holds until markets close, it would push Wall Street’s main barometer of health into a bear market. Economists had expected that a U.S. report Friday on consumer prices would show the worst inflation in generations had slowed a touch last month. But inflation accelerated to 8.6% in May.
That would suggest the Federal Reserve will need to continue raising interest rates aggressively and taking other measures to slow the economy and to cool inflation. The growing expectation is for the Fed to raise its key short-term interest rate by half a percentage point at each of its next three meetings, beginning next week. Last month’s half-point increase is the only time since 2000 that the Fed has raised rates by that much.