The S&P 500 extended losses for a third day as megacap tech sold off and energy stocks joined a plunge in oil. The yield on the 10-year U.S. note fell as much as 12 basis points below the two-year rate. So-called curve inversions are a possible harbinger of an economic contraction. Economists say inflation continued to rise in June, reaching a pandemic peak that will keep the Federal Reserve on track for another big hike. The consumer price index expected on Wednesday likely rose 8.8 percent from a year earlier — the biggest jump since 1981, according to the median forecast in a Bloomberg survey. “The market is showing nervousness about what this is going to look like,” said Patrick Kaser, portfolio manager at Brandywine Global. “There has been talk of a drop in commodity prices, but we’re not seeing that flow yet. We still expect that number to be quite high.” Traders were also closely watching the dollar, which has fluctuated since reaching its highest level since the COVID-19 panic in March 2020. For now, a wall of bets on derivatives is preventing the euro from reaching parity with the dollar for the first time in two decades. The effects of a stronger US currency will also be scrutinized during earnings season. PepsiCo Inc., one of the first major industry players to report second-quarter results, said demand remained strong despite inflation — but highlighted adverse currency translations. “In the current environment, dollar strength is a sign of investor concern about a global recession as it signals a flight to the relative safety of the world’s reserve currency,” wrote Nicholas Colas, co-founder of DataTrek Research. “Until the dollar starts to weaken, it’s hard to believe the lows are in for US stocks in 2022.” Trading revenue at Wall Street’s five biggest banks likely rose 16 percent to US$27.8 billion in the second quarter, according to analyst estimates compiled by Bloomberg. That rise would come as a result of market swings fueled by recession fears, soaring inflation and global turmoil. Sam Zell, the billionaire made famous by his real estate deals, said the central bank’s actions to flood the market with money in recent years are coming back to bite the economy. He urged Fed Chairman Jerome Powell to raise interest rates by as much as 75 basis points and “break the inflation mentality.” “The Fed and other central banks are still focused on getting real inflation back up, but every other indicator we have on inflation shows that this should no longer be our primary concern and we should be more concerned about slowing growth Brian stated. Nick, Chief Investment Strategist at Nuveen. Elsewhere, Bitcoin slipped back below US$20,000, following last week’s rally. What to watch this week:

Due earnings from JPMorgan, Morgan Stanley, Citigroup, Wells Fargo New Zealand interest rate decision, Wednesday US CPI data, Wednesday Federal Reserve Beige Book, Wednesday US PPI, jobless claims, Thursday China GDP, Friday US Business Stocks Industrial Production University of Michigan Consumer Sentiment Empire Manufacturing Retail Sales Friday G-20 finance ministers and central bankers are meeting in Bali from Friday Atlanta Fed President Rafael Bostic speaks on Friday

Some of the main movements in the markets:

inventories

The S&P 500 was down 0.9% at 4 p.m. New York time The Nasdaq 100 fell 1%. The Dow Jones Industrial Average fell 0.6%. The MSCI World Index fell 0.8%.

currency

The Bloomberg Dollar Spot index was little changed The euro was little changed at US$1.0041 The British pound was little changed at US$1.1894 The Japanese yen rose 0.5% to 136.80 yen per dollar

Bindings

The yield on the 10-year note fell three basis points to 2.96 percent Germany’s 10-year yield fell 11 basis points to 1.13%. Britain’s 10-year yield fell 10 basis points to 2.07 percent

Goods

West Texas Intermediate crude fell 8 percent to US$95.80 a barrel Gold futures were down 0.4 percent at US$1,724 an ounce