Stocks suffered their steepest drop of the year early Monday, putting the S&P 500 on course for its worst-ever start to a year.
Driving the news: The benchmark S&P 500 dropped for its fifth straight day, with losses nearing 3% in early trading, momentarily putting it on track to fall into a "correction." Some of the steepest losses were recovered in early afternoon trading.
- A correction is Wall Street-speak for a sell-off that pushes prices down 10% or more from a recent high. It's shorthand for a drop that's more serious than your run-of-the-mill dip.
The big picture: Since the start of the year, the S&P 500 is down a bit more than 9%. If it ends the month there, it would be the worst January for the blue chip index in history, according to Howard Silverblatt, of S&P Dow Jones Indices.
- The previous record holder is January 2009, an ugly moment for the economy, when the stock market fell 8.6%.
Why it matters: The current sell-off in stocks is the market's way of testing the Federal Reserve's resolve, after the central bank in recent months has signaled higher rates are coming.
What's next: The Fed will make its next decision on interest rates on Wednesday. But if the market continues to crumble, all eyes will be on the post-meeting press conference from Chair Jerome Powell, to see if he softens his tone on inflation.
Our thought bubble: If he doesn't, look out below.
