The outlook for inflation and the global economy hinges in large part on where energy prices head next — which makes recent turbulence in natural gas markets a worrying development. What’s happening: European natural gas prices finished at a record on Monday. They remain close to that level on Tuesday after Russia’s Gazprom said it would suspend flows to Germany via the Nord Stream 1 pipeline for three days starting at the end of the month. Natural gas prices in Europe are almost 10 times where they stood this time last year. Prices in the United States are significantly lower, but they’re rising, too. On Monday, they hit their highest level in 14 years. They’ve been pushed up by increased energy use during heat waves, demand from Europe as countries try to stock up for winter and lagging production. Salomon Fiedler, an economist at Berenberg Bank, told me that the sharp run-up in natural gas prices this week makes him confident that Europe is already entering a recession. The Purchasing Managers’ Index from S&P Global released on Tuesday, which measures the services and manufacturing sectors of the economy, showed that business activity among the 19 countries that use the euro contracted for a second consecutive month. There was one reason for optimism. S&P Global said “there were again signs that inflationary pressures at businesses have passed their peak, with rates of increase in both input costs and output prices softening across the board.” But Fiedler expects this relief to be “short-lived.” “With the recent surge in energy prices — wholesale gas prices in particular — we will probably see quite a bit more inflation for the remainder of this year,” he said. This isn’t just bad news for Europe. Citi has said British consumer inflation could peak at 18% in 2023, or nine times the Bank of England’s target. High demand for fuel and limited supply is also propping up natural gas prices for buyers in Asia, and to some extent in North America. Global businesses could take a hit as eye-popping bills weigh on demand for goods and drive up their own costs. And while central banks don’t have control over energy prices, they could be forced to keep hiking interest rates if the impact spreads across the economy and they need to fight a new wave of inflation. One caveat: Oil prices have been moving in the opposite direction. A barrel of Brent crude, the global benchmark, is down 16% since the beginning of July. US oil prices are 15% lower during the same period. Other factors are driving that part of the energy market, as traders hone in on forecasts that slower global growth will reduce demand for fuel. Crude prices could remain volatile in the coming months, however. Saudi Arabian Energy Minister Prince Abdulaziz bin Salman told Bloomberg this week that “extreme” volatility in markets is disconnected from fundamentals, and that OPEC and its allies could be forced to cut production as a result. Stocks tumble as Fed fears make a return Hopes that the Federal Reserve would tap the brakes on aggressive interest rate hikes waned on Monday. Stocks tumbled as investors once again began worrying that the central bank will announce a large hike next month and adopt a hawkish tone at its annual Jackson Hole meeting this week. The latest: The Dow ended the day 1.9% lower, my CNN Business colleague Paul R. La Monica reports. The S&P 500 and the Nasdaq Composite fell 2.1% and 2.6%, respectively. All 30 Dow stocks were lower, and only 25 of the stocks in the blue chip S&P 500 index traded higher Monday. The CNN Business Fear & Greed Index, which measures seven indicators of market sentiment, is edging closer to “fear” levels. The index inched into “greed” territory just a week ago. What changed: Over the summer, traders have been betting that the Fed might ease up as inflation peaks and that a recession in the United States could potentially be averted. But that wishful thinking has come up against muscular rhetoric from Federal Reserve officials, and the reality that policymakers will be wary of declaring victory prematurely. The markets now put the odds of a third consecutive interest rate hike of three-quarters of a percentage point in September at 57%, according to CME Group. That’s up from 41% a week ago. A string of such large increases is unprecedented in modern Fed history. Nearly three in four economists recently polled by the National Association of Business Economics expressed reservations that the Fed can get inflation back down to its 2% goal without causing a recession within the next two years. “The summer party in the equity markets seems to be coming to an abrupt end as hard-line central bank policymakers hover as unwelcome guests, reminding revelers that inflation still remains a big risk,” Susannah Streeter, an analyst at Hargreaves Lansdown, told clients on Tuesday. Bed Bath & Beyond runs out of steam When struggling companies become meme stocks, it can offer their flagging businesses a lifeline. But the window of opportunity for Bed Bath & Beyond\n \n (BBBY) is quickly closing as its stock plummets again. Shares rallied more than 350% between the beginning of August and last Wednesday, at one point hitting $30 apiece. In recent days, the stock has plunged again, finishing Monday at $9.24. Driving the sell-off: Investor Ryan Cohen, the founder of Chewy and chairman of GameStop, dumped most of his stake in the company. Cohen’s backing had helped fuel the initial rally. Now, Bed Bath & Beyond is left to contend with a grim reality: It’s in trouble. Sales for its quarter ending in May fell 25% compared to the same period in 2021, and it’s in need of cash. There are reports that some of the company’s suppliers have stopped shipping products due to late payments for those goods. With its stock back on the downswing, it will be much tougher to raise extra money to change its fortunes, however. Bed Bath & Beyond “finds itself in an unenviable position as it faces steep market share losses, an overabundance of inventory and dwindling cash reserves,” Wedbush Securities analyst Seth Basham said in a recent note to clients. The takeaway: Traders coordinating online have become a powerful force in markets, and the phenomenon shows signs of sticking around. But support from Reddit and other corners of the internet can be fickle, and taking advantage of stock gains to overhaul physical businesses is no easy endeavor. Up next Dick’s Sporting Goods, Macy’s, JD.com and J.M. Smucker report results before US markets open. Nordstrom, Toll Brothers and Urban Outfitters follow after the close. Also today → Coming tomorrow: Earnings from Petco, Nvidia, Salesforce and Snowflake.