On Thursday, the Dow Jones Industrial Average fell below the key 30,000-point level for the first time since January 2021, as investors feared that the Federal Reserve’s aggressive approach to controlling inflation could push the economy into recession.
Markets rebounded on Wednesday after the Federal Reserve announced the biggest interest rate hike since 1994, but changed those gains on Thursday.
The Dow Jones Industrial Average fell 2.5%, or 765 points. The Standard & Poor’s Index fell 3.4%, while the Nasdaq Joint Index fell 4.3% to touch its lowest level since September 2020.
S&P and Nasdaq are in bear market territory, down about 24% and 34% from all-time highs in January and November, respectively. Meanwhile, the Dow Jones Industrial Average fell 19% from its all-time high on January 5th.
“Investor sentiment can only focus on one thing at a time,” said Susan Schmidt of Aviva Investors. Yesterday, the central bank provided what people expected. The CPI is struggling with data that was higher than people expected, and inflation is more violent. Investors now remember facing this sluggish economy.
Recession in economic activity
Data released on Thursday indicates a significant slowdown in economic activity. Housing start-ups fell 14% in May, more than the 2.6% forecast predicted by economists Dow Jones. The Philadelphia Fed trade index for June came in at a negative 3.3, its first contraction since May 2020.
Shares of Home Depot, Intel, JPMorgan, 3M and American Express hit 52-week lows amid fears of a 52-week recession. For Amazon, Apple and Netflix, they fell more than 3%. Shares of Tesla and Nvidia fell 8% and 6%, respectively.
Travel stocks also fell. United and Delta fell 7%, Carnival Cruise Lines, Norwegian Cruise Line and Royal Caribbean fell 10%.
To raise interest
The US Federal Reserve raised interest rates by 75 basis points, or 0.75%, the largest increase since 1994. After several weeks of speculation, the Federal Open Market Committee, which sets interest rates, raised interest rates on funds. The 1.5% – 1.75% range is the highest level since before the onset of the Govt epidemic in March 2020. In addition, members are pointing to a much stronger path to future price rises, preventing inflation from moving too fast until December 1981. By one of the activities commonly quoted.
According to the Individual Members’ Forecast Chart, the central bank’s public benchmark interest rate will end at 3.4%, a correction upwards of 1.5% from the March estimate, and then the group sees the rate rise to 3.8% in 2023, which is the full percentage. Officials have drastically reduced their economic growth forecast for 2022, now expecting a mere 1.7% increase in GDP, up from 2.8% in March. Amid fears of a global recession, annual inflation hit a 40-year high of 8.6% at a time when markets are likely to see sharp interest rate hikes. U.S. stocks fell in the bear market earlier this week, sending negative waves across global markets.
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