Stocks are falling as fears of a financial crisis rise
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A man rides a bicycle past the New York Stock Exchange, Wednesday, Sept. 21, 2022, in New York. Stocks are off to a neutral start on Wall Street ahead of an expected interest rate hike by the Federal Reserve. The S&P 500 was up half a percent early Wednesday, as was the Dow Jones Industrial Average. (AP Photo/Peter Morgan)
(AP Photo/Peter Morgan)
(CNN) – U.S. stocks fell sharply in Friday trading as investors continued to worry that even higher rate hikes by the Federal Reserve could send the U.S. economy into recession.
The Dow was down 662 points, or 2.2%, in early afternoon trading. The S&P 500 and Nasdaq Composite each fell 2.4%.
The Dow is on track to close the day below 30,000 points for the first time since June 17. A major downside risk could see the index drop to a two-year low on Friday.
Investors now have no more places to make money: In addition to the outflow of stocks, the bond market is also selling off, sending US Treasury yields rising to an 11-year high in recent days. The 10-year yield fell back on Friday but is near 3.7%, and the 2-year yield is above 4.1%. That’s a much better return than you can get in stocks these days, so higher bond yields add pressure to the stock market.
Wall Street also remains concerned that the Fed’s rate hike plan could continue to increase borrowing costs, hurting corporate profits that support stock prices. If the Fed is serious about slowing the economy to curb runaway inflation, the recession could cause real pain for consumers who buy the products that commercial companies make.
The market sell-off could continue for some time, as stock valuations are pressured by the Fed’s actions, said Ivan Feineth, head of market strategy at Tigress Financial Intelligence. Investors “may not see a bottom until there is confirmation that inflation indicators have come down significantly,” he added.
In other words: There’s a lot to worry about on Wall Street. CNN’s Fear and Greed Business Index has fallen hard in the “fear” mode in recent days and is closer to “extreme fear.” Investors don’t see much to smile about in the championship.
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Source : ksltv.com