The benchmark S&P 500 index has fallen more than 19% this year as investors fear the Fed’s aggressive policy tightening efforts would send the US economy into a recession. On Wednesday, the Federal Reserve is largely expected to raise interest rates by 75 basis points for the third time in a row.
According to the Commerce Department, residential building permits fell 10% to 1.517 million units, the lowest level since June 2020. The benchmark 10-year Treasury yield in the United States reached 3.56%, its highest level since April 2011, as the yield curve between two-year and ten-year notes inverted further.
An inversion in this portion of the yield curve is seen as a reliable predictor of a recession in one to two years. The S&P 500 is now trading below 3,900 points, a level considered solid support for the index but violated twice in the previous three sessions.