Stock benchmarks on Monday were headed significantly lower near the open, as investors braced for a Federal Reserve gathering early this week that could set the tone for the rest of 2022, amid tensions centered on Russia over the military buildup on the border with Ukraine.
On Monday, the S&P 500 index SPX, -1.40% was in jeopardy of closing in correction territory, with the broad-market index needing to close above 4,316.90 to avoid a fall of 10% from its Jan. 3 record close.
That move would come after the recent downturn for stocks last Wednesday drove the Nasdaq Composite Index COMP, -1.28% into correction territory, commonly defined as a drop of at least 10% from a recent peak, with a bear market characterized as a decline of at least 20% from the recent high.
A rise in Treasury yields, with the Federal Reserve expected to announce plans at its Jan. 25-26 gathering to substantially tighten monetary policy as it combats inflation, has buffeted assets considered speculative, including technology and growth-themed securities, as well as cryptocurrencies such as bitcoin BTCUSD, +2.14%.
The political environment also is a question mark, with U.S. and European diplomats meeting on how they can respond to the threat posed by Russia to Ukraine. The Russian ruble RUBUSD fell on Monday to the weakest level in more than a year.
That dynamic was helping to deliver a further gut punch to bullish investors to start the week. Wall Street had enjoyed a period of solid gains in stocks, buoyed by fiscal and monetary stimulus to help buffer against COVID-induced weakness, and that period of accommodative policies is likely to be retracted by the Fed, a blow to speculative fervor.
Other major benchmarks also were at risk of breaching key levels and even entering either bear market or a correction.
As of Friday’s close, the Dow Jones Industrial Average DJIA, -1.29% was off 6.9% from its Jan. 4 record close, with correction level at 33,119.68.
The small-capitalization Russell 2000 index RUT, -0.42%, meanwhile, was off 18.6% on Friday, with the index needing to stay above a close at 2,198.47 to avoid a bear market.
—Ken Jimenez contributed to this article