The S&P 500 is on track for its worst January ever. Here’s why stocks

Though some areas of the market considered more expensive or speculative began to struggle in November, the broader market took a big step back during the first week of January following increasing hints from the Federal Reserve that the central bank will take aggressive action to slow down the jump in consumer prices.

“Over the past month, the Federal Reserve (Fed) has made it increasingly clear that it is serious about fighting that inflation,” the Wells Fargo Investment Institute said in a note to clients on Jan. 19.

The central bank has signaled that it plans to stop its asset purchases, hike rates and possibly reduce its balance sheet, starting in March. Government bond yields have surged in preparation for the rate increases, with the U.S. 10-year Treasury rising more than 40 basis points this year alone to nearly 1.9% at its high point after finishing last year just above 1.5%. (1 basis point equals 0.01%.)

Investors are now expecting four rate hikes this year, with some officials warning that more may be needed, after most Wall Street pros expected just one or two hikes a few months ago.

“The Dec. 15 minutes that came out on Jan. 5, they were a shock to investors,” Ed Yardeni, founder of Yardeni Research, said on CNBC’s “Halftime Report” on Monday.