U.S. 10-year yields hovered near 3.7%, the highest since February 2011. The S&P 500 closed at its lowest level since June, with some Wall Street voices predicting the index may soon test the bottom of June which is about 2.5 percent below current levels. FedEx Corp. rose after saying it expects to save up to $2.7 billion as a result of cost-cutting steps. The dollar remained near an all-time high, fueled by aggressive Fed policy and safe-haven investors. The Swiss franc fell as the central bank’s hike fell short of expectations, while Japan supported its currency for the first time since 1998. The Fed gave its clearest signal yet that it is willing to tolerate a slowdown as a necessary trade-off to regain control of inflation, with officials predicting a further tightening of 1.25 percentage points before the end of the year. Norway, Britain and South Africa also followed with hikes of their own as officials scramble to deal with runaway price hikes. “We see this new rate path, even higher for longer, associated with a significantly higher probability of a hard landing, and therefore not just clearly bearish but clearly bad for risk,” said Krishna Guha, vice president of Evercore ISI. The S&P 500 could be poised for more declines after breaking through a rare technical indicator, according to Berenberg strategists, including Jonathan Stubbs. It has traded below its 200-day moving average for more than 100 sessions — a streak previously broken only during the tech bubble and global financial crisis of the past 30 years. In both of those cases, the index posted most of its losses after breaking through that level, with the index falling a further 50 percent in 2000-2003 and 40 percent in 2008-2009 before the decline, they said. Evercore’s chief equity and quantitative strategist Julian Emanuel cut his year-end forecast for the S&P 500 to 3,975 from 4,200 and expects a “full review” of the June low in the coming weeks. The reduction in the target is due to a growing possibility of a recession after Fed Chairman Jerome Powell warned that the process of raising interest rates will not be “painless” for the labor and housing markets. “The bad news is that we’re still in one of the weakest seasonal windows of the year, especially in a mid-term year,” said Jonathan Krinsky, chief market technician at BTIG. “The good news is that it quickly reverses by mid-October. We believe we will test or break the June lows before then, which will create a better entry point for a year-end rally.” Dennis DeBusschere at 22V Research expects markets to remain volatile while maintaining his range-bound neutral stance on stocks. “It’s hard to wait until we get signs of slower underlying demand growth, but tail risk is limited by already tighter economic conditions, lower PEs and higher implied volume,” he wrote. The environment is not conducive to strong directional positioning in overall indices, according to Mark Haefele at UBS Global Wealth Management. However, he advises against retreating to the margin, “especially given the pull of cash from high inflation and the challenge of timing the return to markets without missing rebounds.” “Instead, we remain invested but selective and focus our preferences on defense, income, value, diversification and security,” he added. Here are some of the main moves in the markets: inventories

The S&P 500 was down 0.8% at 4 p.m. New York time The Nasdaq 100 fell 1.2%. The Dow Jones Industrial Average fell 0.4%. The MSCI World index fell 1 percent

currency

The Bloomberg Dollar Spot Index was little changed The euro was little changed at US$0.9839 The British pound was down 0.1% at US$1.1257 The Japanese yen rose 1.2 percent to 142.35 yen per dollar

Bindings

The yield on the 10-year note rose 17 basis points to 3.70 percent Germany’s 10-year yield rose seven basis points to 1.96%. Britain’s 10-year yield rose 18 basis points to 3.50 percent

Goods

West Texas Intermediate crude rose 0.7% to US$83.49 a barrel Gold futures rose 0.3 percent to US$1,680.60 an ounce