US stock market opens lower with larger Fed rate hike worries

By Ovunc Kutlu

ANKARA (AA) – The US stock market opened lower on Monday as major selloff continues with worries that the Federal Reserve could make a larger rate hike on Wednesday to lower inflation.

The Dow plummeted 123 points, or 0.4%, to 30,698 at 9.43 a.m. EDT. The S&P 500 fell 12 points, or 0.3%, to 3,860.

The tech-heavy Nasdaq was down 30 points, or 0.26%, to 11,420.

The indices recorded their worst single-day losses in 2022 last Tuesday in a massive selloff, as annual consumer inflation in the US hit 8.3% in August, above estimates of an 8.1% annual increase.

The Fed could make a 100 basis points of interest rate rise at the end of its two-day meeting on Wednesday to put pressure on inflation that is hovering around its highest level in 40 years.

If realized, this would be the largest rate hike since February 1989.

The probability of the Fed raising rates 100 basis points climbed Wednesday to as high as 34%, but it was at 20% shortly after the opening bell on Monday, according to the FedWatch Tool provided by US-based global markets company Chicago Mercantile Exchange Group.

The VIX volatility index, also known as the fear index, rose 3% to 27.09. The 10-year US Treasury yield was up 1.6% to 3.504%.

The dollar index increased 0.3% to 110.06, while the euro was down 0.3% to $0.9988 against the greenback.

Precious metals continued their decline, with gold falling 0.5% to $1,667, a 52-week low. Silver fell 0.9% to $19.40.

Oil prices were down more than 1.5%. Global oil benchmark Brent crude was trading at $89.92 a barrel for a 1.6% loss. US benchmark West Texas Intermediate was around $83.16 – down 1.9%.