The US stock index fell sharply on Thursday as concerns about a recession increased as central banks around the world moved to counteract inflation after the Fed’s biggest rate hike since 1994.
The Benchmark S & P 500 went well towards its sixth decline in seven sessions. As expected, Wednesday’s share price rebounded as the Fed aggressively raised rates by 75 basis points.
However, subsequent rate hikes by the Swiss and British central banks on Thursday rekindled concerns that central bank attempts to curb inflation could lead to a sharp slowdown in global growth or a recession.
“It’s a belief that the Fed will be forced into a recession and even high-value investors will beat the market until their uncle cries,” said Jack Ablin, chief investment officer at Cresset. rice field. Chicago capital management.
“This is also important,” Ablin said, referring to the Fed’s intervention during the major financial crisis to bail out risk takers. “It was the benefit of keeping the banking system together, but it started a relationship between risk takers and central banks, and inflation is driving the wedge between them.”
The Dow Jones Industrial Average fell 847.47 points (2.76%), the S & P 500 fell 140.38 points (3.70%), and the Nasdaq Composite fell 505.61 points (4.56%).
With the Federal Reserve hoping to design a soft landing for the economy, Wells Fargo analysts now see a more than 50% chance of a recession. Other banks warning of increased risk of recession include Deutsche Bank and Morgan Stanley.
The Benchmark Index has fallen about 23% year-to-date, confirming that the bear market recently started on January 3, but the Dow Jones Industrial Average is trying to identify its own bear market.
The CBOE Volatility Index, also known as Wall Street’s Fear Gauge, rose 14.21 points to 33.83, just below the monthly high of 35.05 at the beginning of the week.