Stocks Fall Sharply as Investors Readjust Economic Expectations
The Dow Jones Industrial Average temporarily fell over 800 points on Friday, entering bear market territory and reaching a new yearly low. Why is this happening?
Analysts across the media pointed to a range of factors influencing investors’ decisions, including persistent inflation in certain sectors, global interest rate hikes, the ongoing war in Ukraine and recession fears. Investors may have also been impacted when Goldman Sachs strategists cut their 2022 expectations for the S&P 500 by 16% Thursday evening. The S&P 500 and the Nasdaq Composite each fell over 2% Friday morning.
International markets also took a hit on Friday; Europe’s Stoxx 600 index — which includes major European brands like AstraZeneca, Nestlé and Volkswagen — fell into bear market territory. Additionally, Australia’s S&P/ASX 200 index fell 1.87%, South Korea’s KOSPI fell 1.81%, and China’s Shanghai Composite fell 0.66%.
Coverage was widespread across the spectrum, particularly in business-focused outlets. Coverage generally agreed that investor anxiety over recent economic shifts was the cause, with varying degrees of blame placed on the Federal Reserve’s anti-inflation interest rate hikes.
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From the CenterFrom the Fed to Europe’s currency crisis, here’s what’s behind this selloff in financial markets
Stocks fell sharply, bond yields rose and the dollar strengthened Friday as investors heeded the Federal Reserve’s signal that its battle with inflation could result in much higher interest rates and a recession.
The sell-off Friday was global, in a week where the Fed boosted rates by another three-quarters of a point and other central banks raised their own interest rates to combat global inflation trends.
From the RightInvestors are now bracing for 'hard landing' for economy
Markets have been in decline for the past two weeks as investors prepare for the growing likelihood that the Federal Reserve won’t be able to avoid plunging the economy into a recession.
A month ago, some economists were giving about even odds that the Fed could pull off a “soft landing,” which means tamping down inflation by raising interest rates while skirting an economic recession. Since then, investor outlook appears to have quickly become gloomy in the face of a worse-than-expected inflation report and another massive rate hike.
From the LeftStocks plunge as recession fears mount
US stocks fell sharply in Friday trading as investors continued to worry about even more rate hikes from the Federal Reserve that could land the US economy in a recession.
The Dow (INDU) tumbled 602 points, or 2%, in afternoon trading. The S&P 500 (SPX) and the Nasdaq (COMP) Composite were each down 2.2%.
The Dow is currently within 20 points of reaching bear territory. If the Dow finishes at or below 29,439.72, it would mark a 20% fall from the indexes record close of 36,799.65 set on January 4, and send the index into an official bear market....