Wall Street down amid heightened fears of a recession

Posted Dec 15 2022 at 22:20

couple Chuck Mikolajczak

NEW YORK, Dec 15 (Archyde.com) – The New York Stock Exchange ended sharply lower on Thursday, with its three main indexes posting their worst declines in several weeks, as fears grew over aggressive Reserve action. Federal (Fed) response to inflation pushing the economy into recession.

The Dow Jones index fell 2.25%, or 764.13 points, to 33,202.22 points.

The broader S&P-500 lost 99.57 points, or 2.49%, to 3,895.75 points.

The Nasdaq Composite fell for its part by 360.36 points (3.23%) to 10,810.53 points.

This is the largest daily percentage decline since Nov. 2 for the S&P-500 and the Nasdaq, and since Sept. 13 for the Dow Jones.

While the Fed on Wednesday announced a lower interest rate hike than before – 50 basis points compared to 75 basis points at the four previous meetings – US central bank chairman Jerome Powell warned that recent signs of slowing inflation were insufficient to convince the Fed that the battle once morest soaring prices was won.

At the end of its monetary policy meeting, the American central bank said it anticipates further rate hikes next year, to exceed 5%, a threshold more visible since the vast economic trough of 2007.

“That’s what the market is concerned regarding, that the Fed is going too far,” said Quincy Krosby, chief strategist at LPL Financial in Charlotte, North Carolina.

“The market is basically saying, if you keep this going, a recession is pretty much a given,” he added.

Fueling fears of a global recession, the Bank of England (BoE) and the European Central Bank (ECB) indicated on Thursday that they would extend their rate hike cycles. The main central banks have, for the most part, adopted an aggressive strategy in the hope of curbing galloping inflation.

In sharp decline in mid-October, equities had rebounded on a background of optimism in the face of signs indicating a decline in inflation, suggesting the possible end of monetary tightening by the Fed. But the trend took a turn for the worse in December, with mixed economic data and the course maintained by the American central bank raising fears of a recession.

Data released Thursday showed U.S. retail sales fell more than expected in November, as did the nation’s weekly jobless claims, highlighting a tight labor market that is not helping not to calm inflation.

All major sectors of the S&P-500 ended the session in the red. Among them, communication services and technology fell regarding 4%.

On the value side, Netflix fell 8.63% following a news article reported that the streaming giant had decided to reimburse its advertisers following audience figures below targets.

(French version Jean Terzian)