Stocks, Oil Prices Fall Sharply As Investors Brace for Fed Rate Increase

The Dow Jones Industrial Average dropped more than 350 points Tuesday as traders spurned risk and sought safety in government bonds, worried that the Federal Reserve’s looming interest-rate decision is arriving at a precarious moment for the economy.

The pain spread across economically sensitive markets, walloping regional bank stocks, oil prices and low-quality bonds. Treasury debt and gold—traditional safe havens amid market distress—were among the few assets to gain.

Concerns about the health of the banking sector grew after First Republic Bank was seized by regulators, failing to overcome the deposit flight that had plagued the lender for weeks. JPMorgan Chase’s deal to buy the bank soothed markets Monday, but sentiment soured as Wall Street took stock of the fallout.