Stocks dropped, while Treasuries and the dollar rose as concern about the withdrawal of Federal Reserve stimulus mixed with growing angst around the coronavirus and global supply chains.

The S&P 500 was down for a third day, and a gauge of equity volatility headed for its biggest weekly increase since January. Commodities sold off, with iron ore plunging and oil on track for its longest losing streak since the early days of the pandemic. The rout in Chinese companies listed in the U.S. deepened after the industry was hit with a fresh round of proposed regulations, with Alibaba Group Holding Ltd. and Baidu Inc. tumbling.

Investors are bracing for the withdrawal of unprecedented liquidity as the developed world looks to mass vaccinations to keep the recovery on track. However, the persistent spread of coronavirus and slowing China growth raise questions about whether the global economy can absorb the winding down of quantitative easing. That’s pushing them to buy protection against equity swings.

“The U.S. equity markets are overdosed with cheap liquidity and keep posting new highs despite a sticky global pandemic, repeated lockdown measures, shattered economies, lost jobs, hammered lives and escalating inflation,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank. “Therefore, any hint on QE tapering could have a meaningful impact on the market sentiment.”

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.6% as of 9:30 a.m. New York time
• The Nasdaq 100 fell 0.4%
• The Dow Jones Industrial Average fell 0.7%
• The Stoxx Europe 600 fell 1.8%
• The MSCI World index fell 1.1%

Currencies

• The Bloomberg Dollar Spot Index rose 0.4%
• The euro fell 0.1% to $1.1696
• The British pound fell 0.6% to $1.3670
• The Japanese yen was little changed at 109.81 per dollar

Bonds

• The yield on 10-year Treasuries declined two basis points to 1.24%
• Germany’s 10-year yield was little changed at -0.48%
• Britain’s 10-year yield declined three basis points to 0.54%

Commodities

• West Texas Intermediate crude fell 3.3% to $63.32 a barrel
• Gold futures rose 0.3% to $1,790.20 an ounce

©2021 Bloomberg L.P.