Technology and healthcare are leading the decline in markets

Wall Street posted further losses on Friday amid growing fears that the Federal Reserve and other central banks are poised to trigger a recession if it is needed to crush inflation.

The S&P 500 fell 1.1% for the third straight month. The Dow Jones Industrial Average fell 0.8% and the Nasdaq Composite lost 1%. The major indices marked their second weekly loss in a row.

The retreat was wide. More than 80% of stocks in the benchmark S&P 500 fell. Technology and healthcare stocks were among the largest weights in the market. Microsoft fell 1.7% and Pfizer fell 4.1%.

The Fed this week raised its forecast of how high it will eventually set rates, trying to quash some investors’ hopes of rate cuts next year. In Europe, the central bank appeared even more aggressive in the eyes of many investors.

“Inflation continues to be the monster in the room,” said Liz Young, head of investment strategy at SoFi.

Inflation has moderated from the highest levels in decades but remains painfully high. This has prompted the Fed to continue its aggressive attack on prices, raising interest rates to slow economic growth. The strategy increasingly risks slamming on the brakes too hard and pushing an already ailing economy into recession.

“Whether this is a mild, moderate or deep recession is still unknown,” Young said.

A mixed report from S&P Global on Friday highlighted the risk of a recession. Business activity was shown to have slowed more than expected this month as inflation weighs on businesses. It also noted that this was the sharpest drop since May 2020, but that inflationary pressures have also eased.

READ :  Climate Change Magnifies Health Impacts of Wildfire Smoke in Care Deserts

“In short, the survey data suggests that Fed rate hikes are having the desired effect on inflation, but that economic costs are rising and recession risks are consequently increasing,” said Chris Williamson, chief economist at S&P Global Market Intelligence.

The S&P 500 fell 43.39 points to 3,852.36. It’s down about 19% this year now. The Dow fell 281.76 points to close at 32,920.46. The Nasdaq slipped 105.11 points to 10,705.41.

Smaller company stocks suffered more modest losses than the broader market. The Russell 2000 fell 11.19 points, or 0.6%, to 1,763.42.

Bond returns were mixed. The 10-year Treasury yield, which drives mortgage rates, rose to 3.49% from 3.45% late Thursday. The two-year Treasury yield, which is in line with expectations for Fed action, fell to 4.21% from 4.24% late Thursday.

The Fed ended its last meeting of the year on Wednesday with a half a percentage point hike in short-term interest rates, the seventh straight hike this year. Wall Street had hoped the central bank would signal an easing of rate hikes through 2023, but the Fed instead signaled the opposite.

The federal funds rate is in a 4.25% to 4.5% range, its highest level in 15 years. Fed policymakers forecast that the central bank’s policy rate will reach a range of 5% to 5.25% by the end of 2023. Their forecast calls for no rate cut before 2024.

Several companies braved broader losses on Friday after reporting strong financial results and guidance. Software maker Adobe rose 3% after beating Wall Street’s fourth-quarter earnings forecasts. United States Steel rose 5.8% after giving investors a strong earnings forecast.

READ :  New year, new home care laws: Medicaid-funded home care services must implement EVV by January 1, 2023 | Hodgson Russ LLP

Information for this article was contributed by Elaine Kurtenbach and Matt Ott of The Associated Press.

Leave a Reply

Your email address will not be published. Required fields are marked *