Market Volatility Rises Sharply As Rate Hike Fears Return

U.S. stocks closed sharply lower on Monday ahead of Federal Reserve Chair Jerome Powell's speech at the central banking conference later this week in Jackson Hole.

The U.S. central bank is expected to increase interest rates by 50 basis points during its September’s meeting. China's central bank, meanwhile, lowered some key lending rates to provide some support to its slowing economy.

Mega-cap stocks, including, Apple AAPL, Tesla Inc TSLA, Amazon.com AMZN and Microsoft MSFT all traded lower, and were among the biggest drags on the both the S&P 500 and Nasdaq indices.

The Nasdaq 100 dipped 2.66% to close at 12,890.54 on Monday, while the S&P 500 fell 2.14%. The Dow Jones dropped around 643 points to settle at 33,063.61 in the previous session.

All the major sectors on the S&P 500 closed on a lower note, with consumer discretionary and information technology stocks recording the biggest plunge on Monday.

The Chicago Board Options Exchange's CBOE Volatility Index (VIX) jumped 15.5% to 23.80 points on Monday, recording its highest level in over two weeks.

What is CBOE Volatility Index?

The CBOE Volatility Index, popularly known as VIX, is a measure of the equity market's expectation of volatility based on S&P 500 index call and put options.