Wall Street closed sharply lower on Monday with rising bond yields acting as a drag on the market’s growth stocks, ahead of the launch of crucial inflation data.

All three major U.S. stock indexes ended deep in negative territory, with tech and tech-adjacent stocks pulling the Nasdaq down 2.2%.

“There’s been two kinds of sell-offs in the past month or two,” said Peter Tuz, president of Chase Investment Counsel. “There’s the rising yields which primarily affects tech and other growth stocks, and then there’s the recession/economic slowdown sell-off that affects energy and various materials’ names. Today you’re seeing both.”

Ahead of the launch of key inflation data, scheduled to be released later today, the benchmark 10-year U.S. Treasury yield hovered over a three-year high.

The U.S. Federal Reserve is struggling to fight a scorching inflation, with market participants largely expecting the central bank hiking interest rates by a series of 50-basis-point in the coming months.

“All eyes on an inflation number that’s probably going to be the highest in 40 years, which could prompt higher and more frequent (interest) rate hikes from the Fed,” said Tuz.

The Labor Department’s CPI report, scheduled for launch later today, is expected to show that the inflation wave has crested. Analysts expect the report to show a 8.5% year-on-year growth in consumer prices, marking its biggest jump since 1981.

The Biden Administration’s economic policies in the ongoing Ukraine-Russia conflict has made it more difficult for the Federal Reserve to fight inflation.

The Dow Jones Industrial Average fell by 413.04 points, to 34,308.08; the S&P 500 also slipped by 75.75 points, to 4,412.53 while the Nasdaq Composite slumped by 299.04 points to 13,411.96.

All 11 major sectors in the S&P 500 ended the session deeply in the red, with energy shares suffering the biggest percentage losses.

Volume on U.S. exchanges was 11.03 billion shares, compared with the 12.71 billion average over the last 20 trading days.

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