Inflation fears put dent in markets

Oil also falls 8% on concern about new restrictions in Europe.

Stocks fell from record highs, oil slumped and Treasury yields touched some of the highest levels in more than a year amid concern the Federal Reserve risks letting inflation accelerate.

The S& P 500 sank 1.5% and the Nasdaq composite retreated 3%, the largest tumbles in three weeks for both indexes. The Dow Jones Industrial Average sank 0.5% after topping 33,000 the previous day.

The rout in risk assets picked up in the afternoon, starting with a sell- off in crude. Oil plunged 8% on concern new restrictions in Europe will hamper demand. Two weeks ago it soared past $ 65 a barrel to the highest in almost two years.

The spike in Treasury yields dented demand for tech shares with high valuations, sending the Nasdaq 100 Index tumbling 3.1%. Swings in asset prices also picked up as they often do around major expirations of options and futures contracts, such as today’s “quadruple witching” event.

“We’re seeing a pattern where an uncomfortable spike in the 10- year Treasury reminds equity investors that their tech stocks are trading well above average,” said Mike Bailey, director of research at FBB Capital Partners.

Ten-year Treasury yields climbed to 1.75% for the first time since January 2020, while the 30- year breached 2.5% for the first time since August 2019 in the wake of Wednesday’s Federal Reserve meeting. Fed Chairman Jerome Powell’s apparent willingness to keep pumping support into the economy and let it run hotter has spurred bets on faster growth and inflation, sending market expectations of price pressures to multiyear highs.