The S&P 500 dropped into bear market territory (20% or more decline from a prior high) on today’s opening move and went on to establish a new 52-week low (3750.76) in the morning trade. At one point, decliners led advancers at the NYSE by a 23-to-1 margin, and the CBOE Volatility Index flirted with 35.00, underscoring the risk-averse mindset that besieged the equity market.

The primary triggers for the indiscriminate selling interest included the following:

Worries about the Fed taking a more aggressive rate-hike path to fight inflation. On a related note, the fed funds futures market is assigning a 33.5% probability to a 75-basis point rate hike at this week’s FOMC meeting, versus just 3.6% in front of the May CPI report.

Reports of renewed lockdowns/shutdowns in Shanghai and Beijing due to the detection of new COVID cases.

A lack of confidence in valuations given that forward earnings estimates have yet to be cut in any meaningful way despite expectations for much slower growth and/or a recession in coming months.

Massive losses for cryptocurrencies coinciding with news that crypto lender Celsius has paused customer withdrawals and transfers due to “extreme market conditions.”

Bitcoin is down 14.7% to $23,812.30 while Ethereum is down 18.5% to $1243.41.

General growth concerns tied to rising interest rates and a flattening yield curve.

Nervousness about forced selling due to margin calls.

The major indices have managed to claw their way back from larger losses, driven presumably by a sense that they had gotten oversold on a short-term basis. At today’s low, the S&P 500 had fallen 9.9% from the intraday high it hit last Tuesday, whereas the Nasdaq had fallen 11.6% from the intraday high it saw last Wednesday.

Even so, the stock market remains saddled with large losses and declines in all 11 S&P 500 sectors. The energy sector (-4.1%) is the worst-performing sector, but it had been down as much as 7.1%. A rebound in WTI crude futures, which had been trading just above $119.00/bbl, has helped in the comeback effort.

Nine of the 11 sectors are down at least 2.3%. The best-performing sectors are the consumer staples and financial sectors, which are down “only” 1.3% and 2.0%, respectively.

The 2-yr note yield, which is sensitive to changes in the fed funds rate, is up 17 basis points to 3.21% after topping 3.24% earlier. The 10-yr note yield is up 19 basis points to 3.34%. The U.S. Dollar Index is up 0.6% to 104.80.

There was no U.S. economic data of note today.

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