The Dow Jones Industrial Average fell 700 points below 30,000 for the first time in over a year, emphasizing plummeting US stocks.

Now both in bear markets, S&P 500 and Nasdaq Composite are down but approximately 23% and 34% respectively, relative to their highs in January 2022 and November 2021. In specific, S&P 500 index is down by 3.2% while Nasdaq Composite slid by 4%. Furthermore, the Dow also dropped about 19% relative to its recent highs.

This came after the rate hike by the US Federal Reserve. The Fed has been for the past few months aggressively hiking interest rates to try and lower rising prices, but its efforts did not materialize in May, with consumer prices hitting four-decade highs. Consumer prices in May rose 8.6% and soared over what economists thought was the peak in March.

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The Western sanctions on Moscow have cut supply chains, pushing Russia out of the global energy market that is already troubled by the uncertainties surrounding supply due to the COVID-19 pandemic.

The US central bank has already indicated that it had plans to hike interest rates on loans this week and throughout July, but it is looking like the Fed is more likely to increase the aggressiveness of its policies put in place to combat inflation. That would drastically affect the national economy and increase the chances of recession.

Fed Chair, Jerome Powell, warned on Wednesday, as he revised this year’s GDP outlook downward and the outlook for unemployment and inflation upward that “it is not going to be easy.” 

In a critical response, Quincy Krosby, chief equity strategist for LPL Financial, told CNN that “markets believed and applauded Chairman Powell’s resolve to fight rising inflationary pressures. And that’s the problem.” 

Earlier this month, the consumer price index (CPI) jumped 8.6% compared to May 2021, up from 8.3% in the 12 months ending in April and topping what most economists thought was the peak of 8.5% in March.

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According to a Labor Department report, prices continued to rise last month for goods including housing, groceries, airline fares, and vehicles, setting new records in multiple categories.

Energy has soared 34.6% over the past year, the fastest since September 2005, while food jumped 10.1% - the first increase of more than 10% since March 1981, the report highlighted.

Furthermore, fuel oil more than doubled, jumping 106.7%, the largest increase in the history of CPI, which dates to 1935.

Food and fuel prices have accelerated in recent weeks and American drivers are facing daily record gas prices, with the national average hitting $4.99 a gallon on Friday, according to AAA.