Stocks Sink on Earnings, Growth Fears

"Worries over inflation and a hawkish Fed are nothing new, but now add in worries over profit margins and the impact of inflation on the consumer and you have the recipe for a big down day," Ryan Detrick, chief market strategist at LPL Financial, said in a note.

"We are pricing in a growth scare," Lori Calvasina at RBC Capital Markets told Bloomberg TV. "The market is trying to find a bottom here. There is a lot of uncertainty in this market right now about whether or not that recession is going to come through or if it's going to be another near-death experience."

What we're seeing this week from big box retailers could be a clue as to what a recession might feel like for markets overall," said Mike Bailey, director of research at FBB Capital Partners. "We're seeing consumers vote with their wallets on what they value most, and we are seeing winners and losers emerge."

"The threat to asset prices is broad-based inflation pushing central banks to tighten monetary policy even more rapidly," Carl Ludwigson at Bel Air Investment Advisors said in a note. "If the Federal Reserve's policy response proves too aggressive, then Treasuries and high-quality municipal bonds will again be the place to hide as tighter financial conditions lead to demand destruction."

In Europe, new-vehicle sales shrank for a 10th month in a row as the industry remains mired in supply-chain crises, while euro-area inflation plateaued at a record high. Meanwhile, UK inflation rose to its highest level since Margaret Thatcher was prime minister 40 years ago, adding to pressure for action from the government and central bank.

Elsewhere, the Biden administration is poised to fully block Russia's ability to pay US bondholders after a deadline expires next week, a move that could bring Moscow closer to a default.

Sri Lanka, meantime, is on the brink of reneging on $12.6 billion of overseas bonds, a warning sign to investors in other developing nations that surging inflation is set to take a painful toll.

Some of the main moves in markets:

Stocks:

• The S&P 500 fell 4% as of 4 p.m. New York time.
• The Nasdaq 100 fell 5.1%.
• The Dow Jones Industrial Average fell 3.6%.
• The MSCI World index fell 2.7%.

Currencies:

• The Bloomberg Dollar Spot Index rose 0.4%.
• The euro fell 0.8% to $1.0465.
• The British pound fell 1.2% to $1.2341.
• The Japanese yen rose 0.9% to 128.27 per dollar.

Bonds:

• The yield on 10-year Treasuries declined nine basis points to 2.89%.
• Germany's 10-year yield declined two basis points to 1.03%.
• Britain's 10-year yield declined two basis points to 1.86%.

Commodities:

• West Texas Intermediate crude fell 2.7% to $109.31 a barrel.
• Gold futures fell 0.2% to $1,815 an ounce.

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