Stocks lose ground on Wall Street, extending weekly losses | Business News
NEW YORK (AP) – Stocks fell on Wall Street on Friday amid growing concerns that the Federal Reserve and other central banks are poised to trigger a recession if it is necessary to get inflation under control.
The S&P 500 is down 1.4% as of 10:41 am EST and is heading for its second consecutive weekly loss. The Dow Jones Industrial Average fell 407 points, or 1.2%, to 32,796 and the Nasdaq fell 1%.
The losses were wide. More than 90% of companies in the benchmark S&P 500 fell. Technology stocks have had some of the biggest losses. Microsoft fell 1.3%.
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 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.
A mixed report from S&P Global on Friday highlighted this risk. 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.
“In short, the survey data suggests that Fed rate hikes are having the desired effect on inflation, but that economic costs are increasing and recession risks are consequently increasing,” said Chris Williamson, chief economist at S&P Global Market Intelligence.
Markets in Europe fell and markets in Asia were mostly down.
Bond yields gained ground. The 10-year Treasury yield, which drives mortgage rates, rose to 3.52% from 3.45% late Thursday. The two-year Treasury yield, which is right in line with expectations for Fed action, rose to 4.26% 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 4% after beating Wall Street’s fourth-quarter earnings forecast. United States Steel rose 4.3% after giving investors a strong earnings forecast.
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Elaine Kurtenbach and Matt Ott contribute to this report.
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