As hawkish central banks around the world continued to dampen sentiment, US stocks fell in a volatile session exacerbated by sharp moves in the UK currency and bond markets.

The S&P 500 closed Monday at its lowest level since December 2020. The CBOE volatility index surpassed 30, a level it has not closed above since June. Treasury yields in the United States increased, with the 10-year yield rising as much as 21 basis points to 3.898%, its highest level since April 2010.

Markets were on edge after a risk asset selloff deepened last week, as the UK's plan to boost its economy fueled fears that heightened inflation would push rates higher and spark a global recession. The pound remained volatile on Monday after plunging to an all-time low, with the Bank of England's comments doing little to reassure traders who were waiting for a broader policy response to the fallout from the government's massive tax cuts.

Officials from the Federal Reserve added to the hawkish rhetoric. Boston Fed President Susan Collins said on Monday that additional tightening is needed to rein in stubbornly high inflation and that the process will result in some job losses. Atlanta Fed President Raphael Bostic also stated that the central bank still has a long way to go in terms of controlling inflation.