Dow drops 1,000 points as markets extend their slide in 2022

A man wearing a face mask walks near a money exchange office in downtown Seoul, South Korea, Monday, Jan. 24, 2022. Asian markets mostly fell on Monday after a sell-off gave Wall Street its worst week since the start of the pandemic in early 2020. (AP Photo/Lee Jin-man)

A woman wearing a face mask drags a cart near a money exchange office in downtown Seoul, South Korea, Monday, Jan. 24, 2022. Asian markets mostly fell on Monday after a sell-off gave Wall Street its worst week since the start of the pandemic in early 2020. (AP Photo/Lee Jin-man)

A woman wearing a face mask walks near a bank in downtown Seoul, South Korea, Monday, Jan. 24, 2022. Asian markets mostly fell on Monday after a sell-off gave Wall Street its worst week since the start of the pandemic in early 2020. (AP Photo/Lee Jin-man)

A woman wearing a face mask walks near a money exchange office in downtown Seoul, South Korea, Monday, Jan. 24, 2022. Asian markets mostly fell on Monday after a sell-off gave Wall Street its worst week since the start of the pandemic in early 2020. (AP Photo/Lee Jin-man)

NEW YORK (AP) — The Dow Jones Industrial Average has dropped more than 1,000 points Monday as financial markets buckled in anticipation of inflation-fighting measures from the Federal Reserve and the possibility of conflict between Russia and Ukraine. Stocks extended their three-week decline on Wall Street and put the benchmark S&P 500 on track to close in what the market considers a correction — a drop of 10% or more from its most recent high. Just after noon, the Dow was down 2.9% while the S&P 500 dropped 3.6%. The Russell 2000 index of smaller companies, whose fortunes are more closely tied to the domestic economy, is now down more than 20% from its recent high.

(asterisk)(asterisk)(asterisk)THIS IS A BREAKING NEWS UPDATE(asterisk)(asterisk)(asterisk) AP’s earlier story appears below.

Stocks sank in morning trading on Wall Street Monday, putting the benchmark S&P 500 on track for what the market considers a correction — a drop of 10% or more from its most recent high.

The S&P 500 fell 2.5% to 4,287.22 as of 10:15 a.m. Eastern, and is now down about 10.7% from the high it set on Jan. 4. A close of 4,316.90 or lower will put it into a correction.

The declines in the market extend a recent run of losses that have left major indexes in a January slump. The Dow Jones Industrial Average fell 712 points, or 2.1%, to 33,544 and the Nasdaq fell 3%.

Investors have been growing increasingly worried about how aggressively the Federal Reserve, which holds a policy meeting this week, might act to cool rising inflation. Wall Street anticipates the first increase in interest rates as early as March, and investors have grown increasingly concerned the Fed will have to raise rates more quickly and more often that the central bank originally indicated.

The Fed’s benchmark short-term interest rate is currently in a range of 0% to 0.25%. Investors now see a nearly 70% chance that the Fed will raise the rate by at least one percentage point by the end of the year, according to CME Group’s Fed Watch tool.

Federal Reserve policymakers will release their latest statement on Wednesday.

On Monday, the energy and raw materials sectors lead the decline. Mining concern Freeport McMoRan slipped 4.6% and General Motors fell 4%.

Technology stocks were among the heaviest weights on the market as investors shift money away from pricier stocks in anticipation of rising interest rates. Higher rates make shares in high-flying tech companies and other expensive growth stocks relatively less attractive.

Apple fell 1.7% and Microsoft shed 1.8%.

A wide range of retailers, travel-related companies and others that rely on direct consumer spending also fell broadly and weighed down the broader market. Target fell 1.1% and Carnival fell 5%.

Bond yields edged lower. The yield on the 10-year Treasury fell to 1.72% from 1.74% late Friday.

Falling yields also weighed on banks, which rely on higher yields to charge more lucrative interest on loans. Bank of America fell 3.8%.

Inflation is putting pressure on businesses and consumers as demand for goods continues to outpace supplies. Companies have been warning that supply chain problems and rising raw materials costs could crimp their finances. Retailers, food producers and others have been raising prices on goods to try and offse the impact.

Rising costs are raising concerns that consumers will start to ease spending because of the persistent pressure on their wallets.

Investors are monitoring the latest round of corporate earnings, in part, to gauge how companies are dealing with higher prices and what they plan to do as inflation continues pressuring operations.

Monday is a relatively quiet day for earnings, but the pace picks up on Tuesday with American Express, Johnson & Johnson, and Microsoft reporting results. Boeing and Tesla report their results on Wednesday. McDonald's, Southwest Airlines and Apple report results on Thursday.

Wall Street also has several key economic reports to look forward this week. Investors will get more data on how consumers feel with the release on Tuesday of The Conference Board's Consumer Confidence Index for January. The Commerce Department releases its report on fourth-quarter gross domestic product on Thursday and its report on personal income and spending for December on Friday.