Stocks tumble, dragging Wall Street into another down week

Stocks tumble, dragging Wall Street into another down week

Wall Street is approaching another day of losses on Friday as the Federal Reserve’s last day interest increase renews fears of a recession.

The S&P 500 was down 62 points to 3,696, or 1.7%, at 10:20 am EST on Friday. The Dow Jones Industrial Average is down 338 points, or 1.3%, to 29,699 and the Nasdaq is down nearly 2%. Barring a wild swing, the major US indices are about to end the week with losses for the fourth time in five weeks.

Oil prices fell 3%, threatening to drop below $80 a barrel for the first time since early January.


Federal Reserve raises interest rate again

00:23

Global recession fears

Central banks in Great Britain, Switzerland, Turkey and the Philippines raised interest rates after the Fed raised its base rate on Wednesday for the fifth time this year and indicated that more increases were on the way.

“Global equities are struggling as the world anticipates rising rates will trigger a much sooner and possibly severe global recession,” Edward Moya of Oanda said in a report.

Investors fear that central banks are willing to put up with a painful economic crisis to keep prices in check.

Some point to signs that the US economy is cooling as support for the Fed to pull back on plans for further rate hikes. But President Jerome Powell said Wednesday’s rates would be kept high for an extended period, if necessary, to bring inflation back to its 2% target.

US consumer inflation dropped to 8.3% in August from the previous month’s 9.1% peak, although prices remain close to a four-decade high as costs for items like food and rent continue to rise. Core inflation, which excludes volatile food and energy prices to give a clearer picture of the trend, rose to 0.6% from a month earlier, up from a 0.3% rise in July. This indicated that the pressure for prices to rise was still strong.


Inflation remains high despite falling gas prices

07:54

“Price levels continue to rise – they’re not slowing down month to month (eg accelerating, not decelerating) and this inflation problem is not quietly disappearing,” said Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance. a note last week.

The Fed on Wednesday raised your referral ratethat affects many consumer and business loans, for a range of 3% to 3.25%. It released a forecast showing that it expects the benchmark rate to be 4.4% by the end of the year, one point higher than forecast in June.

Despite the economic impact of the rate hike, Fed Chair Jerome Powell took an aggressive tone when he affirmed his commitment to reducing inflation.

“Reducing inflation will likely require a sustained period of below-trend growth and will most likely require an easing of working conditions,” he told a news conference on Wednesday.

“We will continue until we are confident the job is done,” added Powell.

In energy markets, benchmark U.S. crude lost $2.75 to $80.74 a barrel in electronic trading on the New York Mercantile Exchange.

Source : www.cbsnews.com

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