The stock market is selling off. Again.
The Dow Jones industrial average tumbled nearly 600 points, or 2.4 percent, early Thursday afternoon, as volatility returned to markets after a brief respite. The Standard & Poor’s 500-stock index fell 2 percent. And the yield on 10-year Treasury bills reached a four-year high of 2.88 percent, reigniting fears that interest rates and inflation would move higher faster than expected.
One likely catalyst for Thursday’s fall were comments from the Bank of England that it might raise interest rates sooner and higher than expected as it looks to fend off possible inflation. That was the latest signal that an epic run of easy money, which buoyed markets worldwide, is coming to an end.
Anxieties about inflation sent the Dow tanking 1,841 points on Friday and Monday, interrupting what had been the second-longest bull run in history. The index recovered partially on Tuesday, gaining 567 points, before wilting by 19 points on Wednesday.
“It’s easy to have positive sentiment toward the stock market when things are going well, but the real test is always when the going gets tough,” analysts at Bespoke Investment Group wrote in a blog post on Thursday. “The last two weeks have provided that test for the bulls, and their response has been all-out retreat.”
Bullish sentiment has dropped in four of the past five weeks, according to a survey from the American Association of Individual Investors. Among survey participants, 37 percent said they feel bullish, compared to the historical average of 38.5 percent.
The so-called VIX index, which follows volatility in the market, moved more than 20 percent higher on Thursday. Last year was one of the most placid ever for traders, but that calm has vanished in the past week.