NEW YORK — Stocks fell sharply as investors anticipate inflation-fighting measures from the Federal Reserve and fretted over the possibility of conflict between Russia and Ukraine.

The stock market extended its three-week decline and put the benchmark S&P 500 on track to a so-called correction — a drop of 10 percent or more from its most recent high. The price of oil and bitcoin fell, and so did the yield on 10-year Treasury notes, a sign of investor concern about the economy.

Stocks have fallen steadily so far this year as the Fed has signaled its readiness to begin raising its benchmark short-term interest rate in 2022 to try to tame inflation, which is at its highest level in nearly four decades. The Fed’s short-term rate has been pegged near zero since the pandemic hit the global economy in 2020 and that has fueled borrowing and spending by consumers and businesses.

The Fed has kept downward pressure on longer-term interest rates by buying trillions of dollars worth of government and corporate bonds, but those emergency purchases are scheduled to end in March. Nudging rates higher is intended to help slow economic growth and the rate of inflation.

By early afternoon the Dow had steadied and was down 721 points, or 21 percent, to 33,544 after falling more than 1,000 points earlier. The S&P 500 fell 2.6 percent to 4,285, and is now down about 10.7 percent from the closing high it set on Jan. 3. A close of 4,316.90 or lower will put it into a correction. The Nasdaq fell 2.8 percent.

“There’s a short-term panic and part of that is the high level of uncertainty around what the Fed is going to do,” said Sylvia Jablonski, chief investment officer at Defiance ETFs.

Jablonski said investors haven’t rushed in to buy stocks during the recent decline. “Buying the dip” has been a hallmark of market optimism for much of the period following the financial crisis in 2008-2009.

Technology stocks again led the broader decline in the market as investors shift money away from pricier stocks in anticipation of rising interest rates. Higher rates make shares in high-flying tech companies and other expensive growth stocks relatively less attractive.

Apple fell 3.1 percent and Microsoft shed 3.3 percent. Nvidia, a high-flier in 2021, fell 7.4 percent and is now down more than 26 percent in January. The technology sector is by far the biggest in the S&P 500 and is now down more than 14 percent so far this year.

The selloff has extended to cryptocurrencies. Bitcoin fell as low as $33,000 overnight but had rallied back above $36,000 in the early afternoon. Still the digital currency is far below the high of more than $68,000 it hit in November.

The market is waiting to hear from Federal Reserve policymakers after their latest meeting ends Wednesday. Some economists have expressed concern that the Fed is already moving too late to combat high inflation.

Other economists say they worry that the Fed may act too aggressively. They argue that numerous rate hikes would risk causing a recession and wouldn’t slow inflation in any case. In this view, high prices mostly reflect snarled supply chains that the Fed’s rate hikes are powerless to cure.

When the Fed boosts its short-term rate, it tends to make borrowing more expensive for consumers and businesses, slowing the economy with the intent of reducing inflation. That could reduce company earnings, which tend to dictate stock prices over the long term.

The Fed’s benchmark short-term interest rate is currently in a range of 0 percent to 0.25 percent. Investors now see a nearly 65 percent chance that the Fed will raise the rate four times by the end of the year, up from a 35 percent chance a month ago, according to CME Group’s Fed Watch tool.

Wall Street anticipates the first increase in interest rates in March. In a note to clients over the weekend, Goldman Sachs forecast four rate hikes this year but said the Fed could be forced to raise rates five times or more if supply chain problems and wage growth keep inflation at elevated levels.

Investors are also keeping an eye on developments in Ukraine. Tensions soared Monday between Russia and the West over concerns that Moscow is planning to invade Ukraine, with NATO outlining potential troop and ship deployments.

Europe’s STOXX 600 index closed down 3.6 percent on concerns about Fed tightening and worries about the situation around Ukraine. The Russian ruble has also fallen after U.S. President Joe Biden indicated that in the event of a Russian invasion the U.S. could block Russian banks from access to dollars or impose other sanctions.

In the U.S. markets, health care stocks were also falling sharply Monday, along with a wide range of retailers. Target fell 2.1 percent and Pfizer shed 4.1 percent.

Bond yields edged lower. The yield on the 10-year Treasury fell to 1.72 percent from 1.74 percent late Friday. Falling yields weighed on banks, which rely on higher yields to charge more lucrative interest on loans. Bank of America fell 3.5 percent.

Inflation is putting pressure on businesses and consumers as demand for goods continues to outpace supplies. Companies have been warning that supply chain problems and rising raw materials costs could crimp their finances. Retailers, food producers and others have been raising prices on goods to try and offset the impact.

Rising costs are raising concerns that consumers will start to ease spending because of the persistent pressure on their wallets.

Investors are monitoring the latest round of corporate earnings, in part, to gauge how companies are dealing with higher prices and what they plan to do as inflation continues pressuring operations.

On Tuesday, American Express, Johnson & Johnson, and Microsoft report results. Boeing and Tesla report their results on Wednesday. McDonald’s, Southwest Airlines and Apple report results on Thursday.

Wall Street also has several key economic reports to look forward this week. Investors will get more data on how consumers feel with the release on Tuesday of The Conference Board’s Consumer Confidence Index for January. The Commerce Department releases its report on fourth-quarter gross domestic product on Thursday and its report on personal income and spending for December on Friday.

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