As hopes for a year-end rally faded, US stocks fell for a second day and treasury yields rose.

The S&P 500 fell to its lowest level since early November as investors worried that the end of China's zero-COVID policy would lead to an increase in cases around the world. Trading volumes remained around 20% lower than the 30-day average at this time of day. The 10-year yield rose to 3.88%, while oil fell. Even as Tesla Inc. sought to halt a seven-day rout caused by concerns about dwindling demand, tech stocks remained under pressure in the United States. The dollar index rose.

After nearly half of the passengers on two flights to Milan were found to have the virus, Italian health officials announced that they would begin testing all arrivals from China for COVID. If a new strain is discovered, officials may impose stricter restrictions on travel from China, according to the health ministry. Later, the US announced that all air passengers aged 2 and up departing from China would be required to take a COVID-19 test no later than two days before their flight.

After a brutal year for financial markets, the cautious mood is dampening hopes for a rally in the final trading week of 2022. Global equities have lost a fifth of their value, the largest annual decline since 2008, and a global bond index has fallen 16%. As the Federal Reserve pursued an aggressive rate-hike path to rein in inflation, the dollar has risen 7% and the US 10-year yield has risen to above 3.80% from just 1.5% at the end of 2021.