(Reuters) – Wall Street was rattled by the prospect of a Russian invasion in Ukraine, and concerns about Federal Reserve tightening policy aggressively. The Nasdaq closed in on a level that would indicate it is in a bearish market since November’s peak.

After closing at an all-time high of Nov 8, the index was down 20% in morning trading. It then fell further to close below that record. It would be considered a bear market if it closes down by 20%. Although the tech-heavy Nasdaq fell 15.6% on its Nov 19 record close it was only 18.5% lower.

Although the index moved above its lowest point, it was 9.9% lower than Jan 3’s record closing. It would be considered a correction if it closed 10% lower than it did on Jan 3.

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MARKET REACTION:

* STOCKS: Dow down 1.81%, S&P 500 down 1.92%, Nasdaq down 1.73%, Russell 2000 up 0.36%

* BONDS: The yield on benchmark 10-year notes fell to 1.6746 [US/]

* FOREX: The rose 0.241% [FRX/]

* : The VIX was up 16% and touched its highest level since Oct 2020

COMMENTS:

MEGAN HORNEMAN, DIRECTOR OF PORTFOLIO STRATEGY, VERDENCE CAPITAL ADVISORS, HUNT VALLEY, MD

The harsh truth that we are ending the extremely easy monetary policy is being accepted by investors. We expect no change at the Federal Reserve meeting this week, but the market prices in a complete quarter point rise in March.

Tech () taking the brunt of weakness: Excess liquidity and ultra easy monetary policy have fueled speculation, euphoria and excessive pricing in some investments. We have observed that these areas are being affected the most by the volatility. Technology has seen valuations rise to dotcom-like levels. More than 70% of stocks on the NASDAQ Index are 20% below their 52 week high.

KEVIN MAHN, CHIEF INVESTMENT OFFICER, HENNION & WALSH ASSET MANAGEMENT, PARSIPPANY, NEW JERSEY

“Today’s slide is part of the continuation of the market reacting to the more hawkish pivot that the Fed took at the end of 2021. That hawkish pivot kind of met the excessive stock market valuations that we saw due in large part to that record three-year run of the S&P 500, which was the best three-year run for that stock index since 1999. This pullback can be attributed to profit-taking and people worried that the Fed might go too far, possibly derailing this economic recovery.

MARC CHANDLER CHIEF MARKET STRATEGIST BANNOCKBURN GLOBAL FOX

“Given people have lost money, whether it’s in crypto or the stock market, people want to find a culprit and I think that people are torn between two possible candidates: the Federal Reserve and Russia.

“I’m skeptical that all of this is Russia driven. But it doesn’t mean when the first shots are fired, there won’t be a dramatic market reaction. 

“Gold has rallied but it’s coming off its highs after peaking last Thursday. The decline in oil prices is also evident. The oil market is experiencing what they refer to as an outside down day. It traded on both sides of Friday’s range, and now is below Friday’s low.”

BURNS MCKINNEY PORTFOLIO MANAGER NFJ INVESTOR GROUP DALLAS

“It seems that we get this every time we go through a Fed tightening cycle, but this just seems more of the same as the stock market is starting to price in the Fed basically concluding its taper and beginning interest rate hikes.”

“You have seen more and more with inflation continuing to prove to be more resilient than had previously been anticipated. Last year, the key word was transitory, transitory, transitory … Everything ends, but I think people weren’t really pricing in inflation being as sticky as it has.”

“Poll numbers have shown that Americans are more concerned about inflation than they are about jobs. You don’t see that very often. As such, the talk has gone from the market pricing in the Fed starting to maybe hike one or two times this year, to hiking three or four times this year, and now it’s looking like it is even pricing in an outside chance of five hikes this year, and there has been some discussion about whether you can have a double boost in March. Each of those steps along the way, the market has kind of pulled back a little bit to price that in.”

DAVID MADDEN, MARKET ANALYST, EQUITI CAPITAL, LONDON

As fears grow about the Russia-Ukraine crisis, traders continue to sell. There are also concerns that the Federal Reserve may issue a hawkish update Wednesday. There is growing concern about Russia’s military presence near Ukraine’s border. These fears are fueled by reports that US and UK embassy personnel in Ukraine were instructed to evacuate the country. Because of the high human and financial costs, dealers are concerned about the possibility that war could break out in Eastern Europe.

“Its déjà vu in the US as worries about several interest rate hikes from the Fed this year is hammering stocks. It is the NASDAQ 100 that is underperforming, as it is heavily exposed to technology. This Wednesday’s US central banking decision will determine the interest rates at which they are expected to raise them. However, this language will still be a focal point. Dealers will try to understand the comments to figure out what rate hikes we can expect by 2022.

PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK

A bad mix of factors has led to panic selling in the marketplace over the past hour. Two factors are really impacting investor sentiment: geopolitical conditions as the winds of war rise and worries that the Fed might be too aggressive this week.

“Today’s dramatic drop in prices is due to geopolitical issues. When you take two markets and compare them, you will see that the U.S. dollars is rising higher, while yields are falling lower. That means people are moving into safe trade.