The S&P 500 is nearing a two-year low as the 10-year Treasury yield surges toward the key 4% level.

US stocks fell on Tuesday and bond yields rose, as investors feared that high interest rates and stubborn inflation would push the economy into recession and hurt corporate earnings.

The S&P 500 plunged more than 1% to its lowest level since November 2020 early in the session, but recovered some losses to trade 0.59% lower, weighed down by weakness in technology stocks such as Meta Platforms, whose higher valuations are affected by higher interest rates. The Nasdaq fell 1.5%, hitting a 52-week low, dragged down by technology and semiconductor stocks. The Dow Jones Industrial Average rose 61 points, or 0.21%, boosted by jumps in the Amgen and Walgreens Boots Alliance.

Bond prices also fell. The yield on the 10-year US Treasury rose by about five basis points to 3.937% after approaching the key level of 4% overnight. Bond yields are inverse with prices, and the basis point is one hundredth of one percent.

These moves came as investors are looking forward to key inflation data that will inform how aggressively the Federal Reserve can raise interest rates to tame inflation. On Wednesday, the producer price report will be released followed by the September CPI on Thursday. On Friday, September retail sales will give insight into consumption.

The path of an interest rate increase by the central bank could push the US economy into recession, which could lead to a decline in the company’s profits.

JPMorgan CEO Jamie Dimon warned Monday that the United States is likely to fall into a recession in the next “six to nine months,” and said the S&P 500 could drop another 20% depending on whether the Fed engineered a downside. weak or difficult. Economy.

“This is an awful market environment grappling with a weak economy, uncertainty about earnings and how long the Fed tightening will last, and sentiment issues with the psychology of very risk-averse investors,” said David Bahnsen, chief investment officer at The Bahnsen. group, in a note on Tuesday.

“We think the Fed will raise rates one or two more times until the fed funds rate hits 4% and then pause, at which point the Fed will assess the damage that has been done,” he added.

This week also begins earnings season. on Friday, JP MorganAnd the Wells FargoAnd the Morgan Stanley And the City Four of the world’s largest banks announce quarterly earnings.