The S&P 500 notched a new closing low this year, and the Dow Jones Industrial Average fell into bear market territory, on the back of surging interest rates and a global currency market in turmoil.
The S&P 500 tumbled roughly 1% to 3,655.04, dipping below the June closing low of 3,666.77. Meanwhile, the Dow slumped more than 300 points and ended the day at 29,260.81. The 30-stock index has slipped into a bear market, now off 20.4% from its Jan. 4 closing high.
A surging dollar, and an all-time low reached by the British pound, contributed to market volatility on Monday. The British pound fell 4% at one point to a record low of $1.0382. Bond yields also soared, with the 10-year Treasury yield rising to its highest level since 2010. The 2-year Treasury yield reached its highest point since 2007.
"Such U.S. dollar strength has historically led to some kind of financial/economic crisis," wrote Morgan Stanley's Michael Wilson, chief U.S. equity strategist, in a note.
Some on Wall Street say the recent drop in equity markets could point to oversold conditions. According to CFRA's Sam Stovall, the S&P 500 could be poised for a comeback.
"With the 10- and 40-week breadth indicators now again at levels that traditionally indicated a very oversold condition, CFRA thinks the S&P 500 and its constituent sectors and subindustries are ripe for a relief rally," he wrote in a Monday note.
"The only question is whether the rally will have legs or get sold into," Stovall added.
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