Stocks fell on Friday to close out a brutal week for financial markets as rising interest rates and foreign currency volatility fueled fears of a global recession.
The Dow Jones industrial average fell 713 points, or 2.4%, to fall below 30,000, a new low for the year. The 30-stock index is down 20% from its highs in what is known as bear market territory on Wall Street. The S&P 500 fell 2.5% to a new 2022 closing low, while the Nasdaq Composite fell about 2.5%.
“The market is shifting clearly and quickly from concerns about inflation to concerns about an aggressive Federal Reserve campaign,” said LBL Financial’s Quincy Crosby. “You’re seeing bond yields rise to levels we haven’t seen in years — that changes the mindset of how the Fed gets to price stability without breaking something.”
British pound scored a New lows in more than three decades A new economic plan that includes tax cuts against the US dollar after a new UK economic plan rattled markets now fearing inflation. Major European markets Lost 2% on the day.
“It’s a global macro mess that the market is trying to sort out,” Crosby said.
Friday marked the fourth negative session in a row for the major averages. The central bank implemented another super-sized rate hike of 75 basis points on Wednesday and indicated it would do another at its November meeting.
Bond yields rose this week following the Fed’s actions, with the 2-year and 10-year Treasury rates hitting highs not seen in a decade.
Goldman Sachs It cut its year-end S&P 500 target It predicts a decline of at least 4% from here as rates continue to rise.
Stocks most vulnerable to a recession led the S&P 500’s consumer discretionary sector to lose 7% this week. Energy fell more than 9% due to falling oil prices. Growth stocks fell on Friday, including big tech names Apple, Amazon, Microsoft and MetaPlatforms.
“Based on our client discussions, the majority of equity investors accept the view that a hard landing scenario is inevitable, and their focus is on the timing, size and duration of the recession and investment strategies for that outlook,” Goldman Sachs wrote. In a note to David Ghost’s clients, he narrows his view.
The major averages are on pace for their fifth decline in the past six weeks. The Dow is up about 4.5% this week, while the S&P and Nasdaq are both down 5.2% and 5.5%, respectively.
