Dow drops nearly 500 points to set new low in 2022
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Stocks fell on Friday to cap a brutal week for financial markets as rising interest rates and currency turmoil fueled fears of a global recession.
The Dow Jones Industrial Average fell 486.27 points, or 1.62%, to 29,590.41. The S&P 500 fell 1.72% to 3,693.23, while the Nasdaq Composite fell 1.8% to 10,867.93.
The Dow posted a new low for the year and closed below 30,000 for the first time since June 17. The 30-stock index fell 19.9% in the past day and hit market territory, one point. and down more than 826 points.
All the major averages closed their fifth week in the last six, with the Dow giving up 4%. The S&P and Nasdaq fell 4.65% and 5.07%, respectively. It marked the fourth consecutive negative session for the major averages as the Fed on Wednesday set another rate hike of 75 basis points and signaled it would do another at its November meeting.
“The market has clearly and quickly shifted from concerns about inflation to concerns about an aggressive Federal Reserve policy,” said Quincy Krosby of LPL Financial. “You’re seeing bond yields rise to levels we haven’t seen in years — it’s changing the mindset of how the Fed gets price stability without breaking anything.”
The British pound has fallen to its lowest level in more than three years against the US dollar after a new UK economic plan that includes a slew of tax cuts hit markets that fear inflation over everything. high now. Major European markets lost 2% on the day.
“This is a global crisis that the market is trying to resolve,” Krosby said.
Friday marked the fourth consecutive negative session for the major averages. The Fed made another hike to a record high of 75 points on Wednesday and indicated it would make another one at its November meeting.
Bond yields rose this week after the Fed’s action, with the 2-year and 10-year hitting highs not seen in a decade.
Goldman Sachs cut its year-end target for the S&P 500 because of rising rates, predicting at least a 4% decline here.
Stocks earmarked to suffer the most from the recession led the week’s losses as the S&P 500 consumer discretionary sector shed 7%. Energy fell more than 9% as oil prices fell. Growth stocks including big tech names Apple, Amazon, Microsoft and Meta Platforms fell on Friday.
“Based on discussions with our clients, most equity investors have taken the view that a difficult settlement situation is inevitable, and are focusing on the timing, magnitude, and duration of the downturn and investment strategies in that view,” wrote Goldman Sachs. ‘David Kostin wrote to clients when he cut his vision.
The major averages are on pace for their fifth decline in the last six weeks. The Dow gave up 4.5% this week, while the S&P and Nasdaq both fell 5.2% and 5.5%, respectively.
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