Stocks plunged on Tuesday amid surging market volatility—a day after the three major indexes mounted an historic comeback from steep losses—as investors remain nervous about surging rates and await clues from the Federal Reserve on how the central bank will deal with inflation.
The Dow Jones Industrial Average fell 1.2%, nearly 400 points, while the S&P 500 lost 2% and the Nasdaq Composite 2.9%.
Tuesday’s losses followed a wild session in which the market staged one of its biggest comebacks in history and finished positive, despite the Dow at one point being down 1,100 points and the Nasdaq as much as 4.9%.
The S&P 500, which briefly hit correction territory on Monday—down 10% from its record high at the start of 2022—looks likely to fall back below that level on Tuesday if losses continue.
Government bond yields like the US 10-year Treasury note moved higher Tuesday, putting added pressure on hard-hit tech stocks as investors focus on the Fed meeting and ongoing geopolitical tensions between Russia and Ukraine.
Investors remain jittery as they await results from the Federal Reserve’s two-day policy meeting which kicked off on Tuesday, as the central bank cuts back on stimulus and prepares to raise interest rates in a bid to control surging inflation.
Wall Street’s preferred fear gauge—the CBOE Volatility Index (VIX)—surged nearly 20% on Tuesday, a day after it briefly hit its highest level in nearly 12 months.