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Dow drops more than 600 points as Fed meeting, Russia-Ukraine tensions loom

US stocks plunged in early trading Monday as concerns about the Federal Reserve’s plans to tighten monetary policy and rising geopolitical tensions spooked investors. The Dow Jones Industrial Average fell more than 600 points, or roughly 1.9%, as of 10:50 a.m. ET. The S&P 500 entered correction territory, falling about 2.3%. The tech-heavy Nasdaq Composite Index dropped about 2.85%. The sharp downturn turn came after US stock indices experienced their worst week since March 2020. Market volatility has increased in recent weeks as investors brace for the Fed’s expected withdrawal of pandemic-era economic support. The central bank is expected to provide a glimpse of its plan, including upcoming interest rate hikes, following a closely-watched policy meeting on Tuesday and Wednesday. The Fed is widely expected to hike rates at least three or four times in 2022, with the first hike projected for March. Over the weekend, Goldman Sachs warned clients the Fed could enact more than four hikes to curtail red-hot inflation. Investors are also reacting to mounting fears that Russia will launch a military invasion of Ukraine, despite numerous warnings and threats of crippling sanctions from the Biden administration. On Sunday, the State Department told the family members of embassy staffers to leave Ukraine due to the ongoing military buildup. The CBOE Volatility index, tracked as a measure of investor anxiety, hit its highest level since at least January 2021, according to Reuters. Leading cryptocurrencies also continued their tumble as investors shed riskier speculative assets. The decline of leading digital currencies has coincided with plunges for tech stocks in recent days. Bitcoin dropped more than 5% to about $33,406. Ethereum dropped more than 10% to $2,188 and Solana dropped 15% to $83.27. The latest market plunge occurred as several blue-chip firms prepare to report earnings later this week. Microsoft reports earnings after the bell on Tuesday, followed by Tesla on Wednesday and Apple on Thursday. Microsoft shares dropped nearly 3% in early trading, while Tesla declined nearly 7% and Apple dropped about 2%. Meanwhile, Peloton shares ticked slightly higher after an activist investor group called on the embattled tech firm to fire its CEO and explore a sale.

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