US stock indexes closed sharply lower on Thursday (December 15), with each of the major averages suffering their biggest daily percentage drop in weeks, as fears intensified that the Federal Reserve’s battle against inflation using aggressive interest rate hikes could lead to a recession.
The US central bank hiked rates by 50 basis points (bps) on Wednesday as was widely expected, downsizing from the consecutive 75 bps hikes at its prior four meetings, but Fed Chair Jerome Powell warned recent signs of inflation were not enough to convince Fed the battle against rising prices had been won.
“The investors were hoping that the Fed would hint that they will finish their rate tightening program by the first quarter of 2023 and begin a rate reduction program by the end of the year,”said Sam Stovall, chief investment strategist at CFRA Research.
“It (the Fed) delayed when they are likely to start cutting interest rates until 2024. So I think that’s what’s causing investors to say time to get defensive once again because a recession is likely around the corner.”
The Fed projected continued rate hikes to above 5% in 2023, a level not seen since a steep economic downturn in 2007.
“The Fed doesn’t care about the stock market. They’ve said it multiple times. But investors seem to feel that because the Federal Reserve for the last 20 years has come to a rescue every time, that they’re going to do it this time.’ said Ken Moraif, founder and CEO of Retirement Planners of America.
“If you think of inflation as cancer, you think of recession is the flu. Given a choice of which one you want, it’s the flu. And so if they’re going to drive us into a recession, that’s they’re going to do it.”
The S&P 500 lost 99.57 points, or 2.49%, to end at 3,895.75 points, while the Nasdaq Composite lost 360.36 points, or 3.19%, to 10,810.53.
The Dow Jones Industrial Average fell 764.13 points, or 2.25%, to 33,202.22.
You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.
For all the latest business News Click Here
