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S&P 500 enters bear market territory as stocks continue slide

Yahoo Finance Live anchors discuss stock market performance ahead of the Fed's rate hike announcement.

Video Transcript

BRIAN CHEUNG: Dow Jones Industrial average down 2.6%. The NASDAQ composite down 4 and 1/4%. S&P 500 down 3 and 1/2%. All of this on the backs of the inflation readings that we got. All of this drift also headed into the Federal Reserve meeting later on this week.

When we take a look at the components of the market that are contributing to a lot of the selling that we've seen so far this morning, you can see red across the board. And Akiko, we were talking about this just before. Interesting to see energy down today, down about 6%. This is despite the fact that in previous selloffs so far, this has usually been a winner.

AKIKO FUJITA: Yeah, it really does feel like there's still this spillover that's coming from what we saw on Friday, that inflation print. Obviously, we had that 800-point drop to close out the week last week. And that's really continuing in the lead-up to the Fed meeting this week. A lot of expectations here about whether, in fact, the Fed could potentially signal a more aggressive move.

I want to point to financials here, too, because we were talking about this. Oftentimes, we talk about the rates going higher, being beneficial to the big banks. That hasn't necessarily been the case. So it's one of those days where we're seeing a broad-based selloff, not a whole lot of correlation that we usually point to.

BRIAN CHEUNG: Yeah, you can see JPMorgan Chase, Bank of America, both down over 3%. If we take a look at just kind of the yield movements that we've been seeing as well, obviously, the banks paying very close attention to what's going on in fixed income. You could see a lot of movement in the 10-year. Not necessarily this morning, but of course, on a two-day basis rising, or actually, if you take a look before, as of the Thursday number, you can see it's risen by about 25 basis points after that 8.6% inflation read.

And I want to note that we've seen a lot of movement in Fed funds futures contracts. You can see that right now. Actually, markets are pricing in about a 35% chance of the Fed doing a 75 basis point move on Wednesday. This is despite the fact that Fed Chairman Jay Powell has said, we're going to do 50 in that meeting. So markets may be testing the resolve of the Fed.

And then one other point I want to make, actually a few minutes ago, we actually got some data from the New York Fed showing expectations among households that they surveyed increasing to about 6.6% on a year ahead basis. If you take a look at just how Americans are feeling about this, they're continuing to expect inflation to rise even higher.