© Reuters.

By Geoffrey Smith 

Investing.com — U.S. stock markets opened sharply lower, led again by losses in technology stocks, as fear of a potential end to the Federal Reserve’s policy of easy money prompted profit-taking in some of the country’s most expensively-valued stocks. 

By 9:40 AM ET (1440 GMT), the , which more than doubled from its post-pandemic low before the recent sell-off started, was down 395 points, or 2.9%, adding to losses of some 2.5% on Monday. The was down 1.1%, while the , home to a greater concentration of mature ‘value’ stocks that command less demanding valuations, was down only 0.5%, or 154 points, at 31,368 points. 

The moves came as Federal Reserve Chairman Jerome Powell prepared to start two days of testimony in Congress about the state of the economy. Fears that the combination of loose fiscal and loose monetary policy could stoke inflation have driven up 10- and 30-year bond yields to their highest in over a year ahead of the testimony, ensuring that Powell’s every word will be scrutinized even more closely than usual.

The most dramatic moves were in the car sector, with Tesla (NASDAQ:) stock – whose valuation has long been at levels hard to justify on traditional metrics – falling 11%. The catalyst for the profit-taking there was the formal announcement overnight that Lucid Motors will merge with the Churchill Capital IV SPAC set up by former Citigroup (NYSE:) investment banking head Michael Klein.

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