U.S. stocks tumbled in early trading Tuesday a day ahead of the Federal Reserve’s expected interest rate hike.
The Dow Jones Industrial Average plunged 387.21 points, or 1.25%, to 30,632.47 an hour after the 9:30 a.m. ET opening of trading.
The S&P 500 dropped 48.61 points, or 1.25%, to 3,851.28, and the Nasdaq Composite was down 109.56 points, or 0.95%, to 11,433.76.
Investors’ fears over inflation and economic recession have led to widespread selling over the last several weeks. The Fed is expected to announce a 75 bps hike in interest rates on Wednesday.
“Heightened fear of recession risk has helped to keep US policy rate pricing inverted from early 2023 to early 2026 and may help to explain why equity volatility is higher than the macro landscape would generally predict,” wrote Goldman Sachs’ Dominic Wilson in a note to clients Tuesday. “Even so, markets will need to adjust signiﬁcantly further if the more hawkish view of the labor market is right.”