Wall Street is falling more on Monday, pushing the S&P 500 down more than 20 percent from its all-time high due to fears of a probable recession in light of persistent inflation.

The S&P 500 fell 3.3% on the first trading day after investors had the weekend to digest the shocking news that inflation is worsening, not better. As of 10:30 a.m. Eastern time, the Dow Jones Industrial Average was down 738 points, or 2.4%, to 30,653, and the Nasdaq composite was down 3.9%.

Wall Street's attention once again centered on the Federal Reserve, attempting to rein down inflation. Its primary approach for slowing the economy is to raise interest rates, a blunt instrument that risks triggering a recession if employed too aggressively.

Traders speculate that the Fed may raise its primary short-term interest rate by three-quarters of a percentage point on Wednesday. This is three times the norm and something the Fed has not done since 1994. CME Group reports that the chance of such a massive price increase has increased from 3 percent a week ago to 30 percent today.

No one believes the Fed will stop there, and markets are preparing for a continuation of larger-than-usual rate increases. Those would be in addition to the previously unfavorable indications regarding the economy and corporate profitability, such as the record-low preliminary rating on consumer sentiment, which was negatively affected by high gasoline costs.

Earlier in the crisis, central banks around the world reduced interest rates to historic lows and took other actions to prop up stock and different investment values to stimulate the economy.

As a result of these predictions, U.S. bond rates have reached their highest levels in years. The yield on the two-year Treasury note jumped to 3.23 percent from 3.06 percent late Friday, marking its second consecutive significant increase. This year, it has more than doubled and reached its highest level since 2008.

The 10-year yield increased to 3.29 percent from 3.15 percent, and the higher level will increase the cost of mortgages and several other types of loans for consumers and businesses.

Additionally, the difference between two-year and 10-year yields decreases, indicating growing pessimism in the bond market on the economy. Some investors believe a recession is imminent if the two-year yield exceeds the 10-year yield.

As markets prepared for more aggressive steps from a clique of central banks, the pain was global.

In Asia, indexes in Seoul, Tokyo, and Hong Kong plummeted by at least 3 percent. Concerns over COVID-19 infections in China, which could prompt authorities to reinstate business-stifling regulations, also weighed on the market.

In Europe, the German DAX plummeted 2.6%, while the French CAC 40 declined 2.9%. The FTSE 100 index in London fell 1.8%.

In the epidemic's early stages, when record-low interest rates encouraged some investors to jump into the riskiest investments, cryptocurrencies soared. According to Coindesk, the price of Bitcoin fell more than 15% and fell below $23,254. It has returned to where it was in late 2020 and has decreased from its peak of $68,990 late last year.

On Wall Street, the S&P 500 index was 21,3 percent below its early-year record. If it finishes the day more than 20 percent below that high, it will enter a bear market, as defined by investors.

Bears hibernate; thus, bears signify a retreating market, according to Sam Stovall, CFRA's senior investment strategist. Stovall explained that Wall Street refers to a rising stock market as a bull market because of the bulls charge.

The previous bear market occurred very recently, in 2020, but it was unusually brief, lasting only about a month. Last month, the S&P 500 came close to a bear market, temporarily falling more than 20% below its all-time high, but it never finished a day below that barrier.

This would also be the first bear market for many beginner investors who entered the stock market for the first time following the epidemic when equities mostly appeared only to rise. In other words, they did so until inflation revealed that the problem was more severe than previously portrayed as "transient."

Michael Wilson, a strategist at Morgan Stanley who has been among the most gloomy voices on Wall Street, maintains his prediction that the S&P 500 will fall to 3,400 even if the economy avoids a recession in the coming year.

That would be another nearly 10 percent decline from the present level, and Wilson said it reflects, among other things, his assessment that Wall Street's earnings projections are still overly optimistic.

Wilson stated in a report that "the next shoe to drop is a discounting cycle" as companies attempt to clear out accumulated inventories in response to a sour attitude among buyers, including those with higher incomes.

Such actions would reduce their profitability because the price of a stock fluctuates based chiefly on how much cash a firm is making and how much an investor is ready to pay for it.

Higher rates reduce investors' willingness to pay high prices for risky assets. Therefore the Fed's actions have a substantial impact on the second portion.

The economists at Deutsche Bank anticipate that the Fed will raise interest rates by larger-than-usual levels on Wednesday, July, September, and November. A week ago, before Friday's inflation news that served as a wake-up call, Wall Street was wondering whether the Fed would suspend rate hikes in September.