On February 21st, 2023, the stock market experienced its worst day of the year, with the Dow Jones Industrial Average falling nearly 700 points. The selloff was broad-based, with all indexes closing at their lowest levels of the year.
The primary factor contributing to the market’s decline was the rise in yields on 10-year Treasury notes, which reached a 3-1/4 month high. This, combined with increasing inflation expectations, created a “perfect storm” that weighed heavily on stocks.
The tech-heavy Nasdaq Composite Index was particularly hard hit, dropping 2.4%, while the S&P 500 fell 1.7%. The Dow Jones Industrial Average fell 2.3%, closing at 33,815.
The market selloff was exacerbated by fears that the Federal Reserve could be forced to raise interest rates sooner than expected in order to keep inflation in check.
Analysts believe the market could remain volatile in the near future, as investors adjust to the new reality of higher interest rates. In the meantime, many investors are turning to safe-haven investments such as gold and government bonds for protection.