Investors dumped stocks on Thursday as more headwinds emerge for the U.S. economy as the Federal Reserve stays the course in raising interest rates.
The Dow Jones Industrial Average lost 764 points points, or 2.2% as the broader markets faced the worst session since November.
Dow Jones Industrial Average
IBM and Apple paced the Dow’s selloff, while Verizon remained in the green.
|IBM||INTERNATIONAL BUSINESS MACHINES CORP.||142.36||-7.50||-5.00%|
|VZ||VERIZON COMMUNICATIONS INC.||37.77||+0.32||+0.85%|
The Nasdaq Composite shed over 3.4% weighed down by Netflix and Meta.
|META||META PLATFORMS INC.||116.15||-5.44||-4.47%|
And all 11 of the S&P’s largest sectors fell, led by tech, materials and industrials, while energy and utilities fell the least.
|XLK||TECHNOLOGY SELECT SECTOR SPDR ETF||129.20||-5.00||-3.73%|
|XLB||MATERIALS SELECT SECTOR SPDR ETF||79.42||-2.50||-3.05%|
|XLI||INDUSTRIAL SELECT SECTOR SPDR ETF||98.54||-2.40||-2.37%|
Weak readings on retail sales and manufacturing sent ripples through the markets 24 hours after Fed policymakers said interest rates will rise to 5.1% in 2023, higher than initial forecasts, in the quest to bring the 7.1% inflation rate down.
FED CUTS RATES BY 50 BASIS POINTS, SIGNALS HIGHER MOVE IN 2023
“The largest amount of pain, the worst pain would come from a failure to raise rates high enough and from us allowing inflation to become entrenched in the economy,” Fed Chairman Jerome Powell said on Wednesday during his press conference following the central bank’s 50-basis-point rate hike.
Bank of America strategists Michael Gapen, Mark Cabana and John Shin collectively predict a recession next year.
“We agree and continue to look for a recession in 1H 2023 and a sharper rise in the unemployment rate than the median FOMC member projects” they wrote. Currently, the Fed expects the unemployment rate to reach 4.6% next year, up from November’s 3.7%.
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