Stocks fall as recession fears escalate

Stocks fall as recession fears escalate
A man rides a bicycle in front of the New York Stock Exchange, Wednesday, September 21, 2022, in New York.  stock...

A man rides a bicycle in front of the New York Stock Exchange, Wednesday, September 21, 2022, in New York. Stocks are on their way to a modestly higher start on Wall Street ahead of a widely expected interest rate increase by the Federal Reserve. The S&P 500 rose half a percent early Wednesday, as was the Dow Jones Industrial Average. (AP Photo/Peter Morgan)

(AP Photo/Peter Morgan)

Dubai, United Arab Emirates (CNN) – US stocks fell sharply in Friday’s trading as investors continued to worry about further interest rate hikes from the Federal Reserve that could lead to a recession in the US economy.

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The Dow tumbled 662 points, or 2.2%, in early afternoon trading. The S&P 500 and Nasdaq Composite were down 2.4%.

The Dow is on track to close the day below 30,000 points for the first time since June 17. A larger decline could send the index to a two-year low on Friday.

Investors don’t have many places to make money right now: In addition to plummeting stocks, the bond market is also selling, sending US Treasury yields to 11-year highs in recent days. The 10-year bond yield fell a bit on Friday but is still near 3.7% and the 2-year yield is above 4.1%. That’s a much better return than you can get from stocks these days, so higher bond yields add pressure to the stock market.

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Wall Street also remains concerned that the Fed’s rate hike plan may continue to increase borrowing costs, hurting corporate earnings that underpin their stock prices. And if the Fed is serious about slowing the economy to control runaway inflation, the recession could cause some real pain for consumers who buy products made by publicly traded companies.

Evan Vincenth, chief market strategist at Tigress Financial Intelligence, said the market sell-off may continue for some time, as stock valuations are pressured by Fed action. He added that investors “may not see a bottom until there is confirmation that inflation indicators have turned significantly lower.”

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In other words: There is a lot to worry about on Wall Street. CNN Business’s Fear and Greed Index has fallen solidly into “fear” mode in recent days and is approaching “extreme fear”. Investors don’t see much to smile on the horizon.

The-CNN-Wire™ & © 2022 Cable News Network, Inc. , a Warner Bros. Discovery Company. All rights reserved.

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About the Author: Omar Dzaki Khawarizmi