Wall Street fell as fears of a Fed recession intensified

  • November retail sales fall, jobless claims fall
  • BoE and ECB each raise rates by 50 bps, witnessing long-term contraction
  • Netflix crashed after the visit was reported
  • Dow fell 2.25%, S&P 500 2.49%, Nasdaq 3.23%.

NEW YORK, Dec 15 (Reuters) – U.S. stock indexes closed sharply lower on Thursday, with each of the average The majors experienced their biggest daily percentage declines in weeks. to recession

The U.S. central bank raised interest rates by 50 basis points on Wednesday, as expected, down from 75 consecutive increases in its previous four meetings, but Federal Reserve Chairman Jerome Powell warned that recent signs of inflation were too convincing. The Fed is not enough. The battle with rising prices had been won.

The Federal Reserve is forecast to continue raising interest rates above 5 percent in 2023, a level not seen since the Great Recession of 2007.

“It’s not just what they did, it’s not what they said, and it certainly seems like they’re still concerned about inflation and that this is not the end of rate hikes,” said Melissa Brown, president of Global Applied Research. Contigo in New York.

It’s really hard to see what could turn things around until we see more data — which could be earnings, which could be the next inflation print or the Fed statement next year. The good news is that it’s almost next year. “

In addition to global recession concerns, the Bank of England and European Central Bank signaled a longer hiking cycle on Thursday. Most of the major central banks have followed a strategy of raising interest rates in an attempt to reign in inflation.

The Dow Jones Industrial Average (.DJI) was down 764.13 points, or 2.25 percent, at 33,202.22. The S&P 500 (.SPX) lost 99.57 points, or 2.49 percent, to 3,895.75. And the Nasdaq Composite (IXIC) fell 360.36 points, or 3.23 percent, to 10,810.53.

The decline was the largest one-day percentage loss for the S&P and Nasdaq since Nov. 2, and the largest for the Dow since Sept. 13. Each closed at its lowest level since Nov. 9.

Values ​​have rallied since hitting year-to-date lows in mid-October, as signs of easing inflation fueled optimism that the end of the Fed’s rate-hiking path may be on the horizon. But the gains stalled in December as investors saw mixed economic data and the Federal Reserve firmly raised the odds of a recession.

Money market participants expect at least two interest rate hikes next year, at a rate of 25 bps, and the cost of borrowing to reach around 4.9% by mid-year, before easing to around 4.4% by the end of 2023.

Investors also weighed economic data on Thursday that showed a sharper-than-expected drop in retail sales in November and a decline in the number of Americans who filed for unemployment benefits last week, pointing to a tight labor market. To help reduce inflation, the labor market must be weakened.

All 11 major S&P 500 sectors were in the red, with communications services ( .SPLRCL ) and technology stocks ( .SPLRCT ) up nearly 4 percent as the session’s worst performers.

Netflix Inc ( NFLX.O ) fell 8.63 percent after a media report said the company is allowing its advertisers to get their money back after missing viewership targets.

Nvidia Inc ( NVDA.O ) fell 4.09 percent after HSBC Global Research initiated coverage on the chipmaker’s stock with a “reduce” rating.

US volume was 12.15 billion shares, compared to the 10.63 billion average for the full session over the past 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a ratio of 4.36 to 1. On the Nasdaq, the ratio was 2.81 to 1 in favor of the decliners.

The S&P 500 hit two new 52-week highs and seven new lows. The Nasdaq Composite recorded 66 new highs and 334 new lows.

Reporting by Chuck Mikolajczak. Additional reporting by Caroline Valetkevitch. Edited by Jonathan Otis

Our Standards: The Thomson Reuters Trust Principles.

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