Wall Street Ends Sharply Lower on Fears of Aggressive Fed

All 11 S&P 500 sector indexes declined, led lower by consumer discretionary, down 2.84%, followed by a 2.78% loss in information technology.

$NVIDIA(NVDA.US)$ dropped 4.6% and $Amazon(AMZN.US)$ fell 3.6%, while $Microsoft(MSFT.US)$ and $Apple(AAPL.US)$ each lost more than 2% as the benchmark 10-year U.S. Treasury yield rose to its highest since July 21.

Technology and other higher-growth stocks often fall when bond yields rise.

After a summer rally on Wall Street ended last week, the S&P 500 remains down about 13% so far in 2022, and the Nasdaq is down more than 20%.

The $CBOE Volatility S&P 500 Index(.VIX.US)$ , Wall Street's fear gauge, rose to 23.9, its highest in over two weeks.

Focus is on Fed Chair Jerome Powell's speech on Friday at the central banking conference in Jackson Hole for further cues on how aggressively the Fed is likely to be with future interest rate hikes.

The Fed will probably raise interest rates by 50 basis points in September, according to economists polled by Reuters.

However, traders are split between a 50 bps hike and a 75 bps hike by the central bank after several policymakers recently pushed back against expectations of a dovish pivot and emphasized the Fed's commitment to fight against inflation.

Investors will also be looking for details on the Fed's plans to reduce its nearly $9 trillion balance sheet, a process that started in June.

Slowdown fears hit markets globally. China's central bank trimmed some key lending rates on Monday in a bid to support a slowing economy and a stressed housing sector.

Also bleeding into negative sentiment on Wall Street, European shares dropped after Russia's Gazprom said last week it would halt natural gas supplies to Europe for three days at the end of August.