U.S. stocks ended a volatile session lower after a slew of Federal Reserve officials hammered home their resolve to remain aggressive in their fight against inflation.

The S&P 500 dropped for the sixth straight session, its longest losing streak since February 2020, sparked by harsh central bank tightening programs. The index swung between gains and losses throughout the session after the Federal Reserve’s James Bullard added to a chorus of officials saying more rate hikes are needed and the risks to the economy remain elevated.  

Treasuries broadly held losses, led by the long-end of the curve. The Bloomberg Dollar Spot Index set a fresh record high as investors sought haven assets. 

Risk assets have been in a tailspin since the Fed delivered a third jumbo hike and warned of more pain to come. An escalation of Russia’s energy conflict with Europe after three pipelines were wrecked in suspected sabotage pushed European natural gas prices higher, further bruising sentiment during the session. Investors also digested a flurry of data on Tuesday, including core capital goods orders and consumer sentiment, that paint a picture of an economy that can likely withstand additional harsh central bank tightening. 

“It is an unsettled market,” said Louise Goudy, partner at Crewe Advisors. “People aren’t sure what the direction and the terminal rate will be, and that’s until we get a better sense of where we’re really going. But the Fed knows that inflation is a genie that’s hard to get back in the bottle and they want to make sure that they take care of the problem at hand and while there are some signs that it is certainly cooled with their blunt hammer of discount rates.”

Markets have been dealing with “one rolling shock after another,” and haven’t been able to fully recover, Jack Janasiewicz, portfolio manager with Natixis Investment Managers Solutions, said in an interview at Bloomberg’s New York headquarters.

“I think what’s driving the markets is they just aren’t comfortable with what’s the terminal rate that the Fed needs to get to -- is it here, is it much higher, is it close?,” he said “That uncertainty creates interest-rate volatility and I think that’s what the market’s having a tough time digesting.”

Higher interest rates and the dollar are driving a lot of the recent selling, Shawn Cruz, head trading strategist at TD Ameritrade, said in an interview.

“Right now there’s a lot of variables up in the air and we’re not going back and forth between optimism and pessimism -- there’s a legitimate repricing and re-evaluation going on at the moment, so it makes sense that you probably aren’t going to see technical levels hold, per se,” he said.

But every tumultuous market day is a step closer to recovery, according to Julie Biel, portfolio manager for Kayne Anderson Rudnick.

“I think there’s more realism, there’s more understanding that a soft landing is just impossible to really navigate when you’ve let out this much fiscal and monetary policy,” she said. “It’s just not possible to engineer this with inflation this high. And so that realism is a positive thing. The thing is that we still kind of have a long way to go in terms of a possible correction.”

U.K. markets also remained in turmoil days after the new prime minister unveiled sweeping tax cuts that threaten to add to inflationary pressures. The 30-year U.K. government bond yield topped 5 per cent for the first time in two decades and the pound held near US$1.07.

Key events this week:

• Fed’s Mary Daly, Raphael Bostic, Charles Evans and ECB President Christine Lagarde speak at events, Wednesday
• Euro zone economic confidence, consumer confidence, Germany CPI, Thursday
• U.S. initial jobless claims, GDP, Thursday
• Fed’s Loretta Mester, Mary Daly speak at events, Thursday
• China PMI, Friday
• Euro zone CPI, unemployment, Friday
• U.S. consumer income , University of Michigan consumer sentiment, Friday
• Fed’s Lael Brainard and John Williams speak, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.2 per cent as of 4 p.m. New York time
• The Nasdaq 100 rose 0.2 per cent
• The Dow Jones Industrial Average fell 0.4 per cent
• The MSCI World index fell 1.3 per cent

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro fell 0.2 per cent to US$0.9592
• The British pound rose 0.3 per cent to US$1.0718
• The Japanese yen was little changed at 144.83 per dollar

Cryptocurrencies

• Bitcoin fell 0.2 per cent to US$19,074.67
• Ether was little changed at US$1,323.64

Bonds

• The yield on 10-year Treasuries advanced five basis points to 3.98 per cent
• Germany’s 10-year yield advanced 12 basis points to 2.23 per cent
• Britain’s 10-year yield advanced 26 basis points to 4.51 per cent

Commodities

• West Texas Intermediate crude rose 2.4 per cent to US$78.54 a barrel
• Gold futures rose 0.1 per cent to US$1,635.50 an ounce