On Friday, as investors worried about rising interest rates and high inflation, stocks nose-dived, government bond prices plummeted, and the pound fell against the dollar.
The percentage change in the S&P 500 has been gradual.
On Friday, it was 22%.
Since then.
Their worries grew as central banks around the world used interest rate increases to fight inflation. Consumers and businesses have been affected by previous rate increases. There is a chance of a period of higher unemployment and slower economic growth.
The investors don't like that idea. The S&P 500 stock index fell as much as 2% before a late rally left it 1.7 percent lower at the close of trading.
The sell-off left the index just above its lowest point for the year in June and almost wiped out gains from a mini rally over the summer. The benchmark index is down more than 22 percent for the year, and on course next week for its third straight quarter of losses, the first time that has happened since the global financial crisis.
The Federal Reserve raised interest rates for the third time in six months. Powell warned that there would be more pain as the central bank focused on fighting inflation.
The risk of a recession is growing because of the rapid rise in interest rates.
She said that it is painful and it is happening quickly. There are so many central banks in the U.S. She said that investors have had to constantly and rapidly adjust to the changing environment.
There were moves across the Atlantic. On Friday, the British government announced a series of tax cuts in order to grow the economy. Many investors were worried that the tax cuts would lead to more rate increases.
The stock index fell more than 2%. A bear market is defined as a fall of 20% or more from the most recent high. The British pound dropped more than 3 percent against the US dollar. On Friday, the pound fell against the euro.
The price of West Texas Intermediate crude oil fell below $80 a barrel for the first time since January, reflecting worries about economic growth. A closely monitored index of manufacturing data shows that manufacturing activity could be cooling in Germany, France and the United States at a level that would suggest a Shrinking Economy. Fears of an impending recession were made worse by that.
The price of crude oil in West Texas.
This year, global central banks have been caught flat-footed. Russia's war with Ukraine caused energy costs to go up and supply chain problems caused product prices to go up at the same time as demand went up. The cost of goods and services went up quickly.
Until last year, policymakers had little choice but to raise rates due to the fact that inflation had dug its heels in. Rate increases bring demand back into line with supply by making people buy less and borrow less.
The course of action was predictable. The speed with which central banks moved this week sent them into a frenzied state.
"It's a continuation of the worries we've had all week that global central banks being led by the Fed are hiking rates sooner than we thought to combat inflation and likely leaving rates higher for longer"
Government bonds that move in the opposite direction of prices have gone up in value. The yield on the two-year Treasury note leaped this week to 4.19 percent, a huge move for a bond that typically moves in tiny fractions.
Goldman lowered its year-end forecast for the S&P 500 to a level that implied a 5 percent fall. The market blew through half of that by the end of the day.
When companies begin to report third-quarter earnings in October, investors will be able to peer into their performance.
Jeff Kleintop said that investors were bracing for downward guidance from C.E.O.s. The loop of lower growth and higher rates is what we're stuck in.
The reporting was contributed to by two people.
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