Shares fell Thursday after the Federal Reserve implemented another aggressive rate hike, fueling fears the central bank will push the economy into recession as it battles to curb rising inflation.
The Dow Jones Industrial Average last fell 91 points, or 0.3%. The S&P 500 was down 0.74% and the Nasdaq Composite lost 1.4%.
Bond yields rose again on Thursday, with 10- and 2-year Treasury yields hitting new multi-year highs in response to aggressive stance from the Fed and central banks around the world making significant hikes despite the impact on the economy.
Growth-oriented technology stocks and semiconductors took a step lower amid fears of slowing economic growth. Industrials and consumer discretionary were the worst performing sectors of the S&P 500, losing at least 1% each.
“The markets feel like they need to recalibrate valuations, and when that happens, it’s done in a linear fashion — ask questions first, ask later,” said Art Hogan, chief market strategist at B. Riley Wealth.
Most analysts have mispredicted where the Fed Funds rate will end the year before Wednesday’s central bank meeting — a misstep likely to weigh on equities on Thursday, he added.
Thursday’s market moves followed a downward session as investors evaluated the Fed’s 75 basis point rate hike. The Dow and S&P fell to levels not seen since June 17 and 30, respectively, while the Nasdaq hit its lowest level since July 1.
Policymakers also pledged to raise interest rates to 4.6% by 2023 before backing off in the fight against inflation, fueling fears on Wall Street of a future slowdown.
“The Fed has paved the way for much of the world to continue aggressive rate hikes, and that will lead to a global recession, and how severe it is will be determined by how long it takes inflation to fall.” said Ed Moya. , a senior market analyst at Oanda.