Stocks fell on Friday to cap a tough week for financial markets, as rising interest rates and foreign currency turmoil heightened fears of a global recession.
The Dow hit a new low for the year and closed below 30,000 for the first time since June 17. The 30 Stock Index ended the day 19.9% lower than an intraday record, flirting with bear market territory. At one point, the Dow Jones fell more than 826 points.
The major averages capped their fifth negative week in six weeks, with the Dow shedding 4%. The S&P and Nasdaq were down 4.65% and 5.07%, respectively. It was the fourth consecutive negative session for stocks, as the Federal Reserve on Wednesday enacted another major rate hike of 75 basis points and indicated it would do so again at its November meeting.
“The market was clearly and rapidly moving from concerns about inflation to concerns about an aggressive Fed campaign,” said Quincy Crosby of LBL Financial. “You see bond yields rising to levels we haven’t seen in years – it changes the Fed’s way of thinking about price stability without a break.”
British pound hit a New low more than three decades Against the US dollar after a new economic plan in the UK that included a series of tax cuts shook markets that fear inflation above all for the time being. Major European markets Lost 2% per day.
“This is a global total mess that the market is trying to sort out,” Crosby said.
Bond yields soared this week after the Fed’s actions, with two- and 10-year Treasuries hitting levels not seen in over a decade.
Goldman Sachs S&P 500 target cut for year-end Because rates are rising, with a drop of at least 4% expected from here.
The stocks that suffered the most in the recession led the week’s losses as the S&P 500 consumer appreciation sector fell 7%. Energy prices fell 9% as oil prices fell. Growth stocks, including big tech names Apple, Amazon, Microsoft and Meta Platforms, fell on Friday.
“Based on our clients’ discussions, the majority of equity investors have taken the view that a difficult downside scenario is inevitable and their focus is on the timing, size and duration of a potential downturn, and the investment strategies for these expectations,” Goldman Sachs wrote. David Costin in a note to clients as he cuts his gaze.
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