U.S. Stocks Stumble As Fed Geared To Pursue Hawkish Rate Policy

Stocks tumbled on Wall Street and across European markets Thursday (Friday, Dec. 16, 2022, in Manila) as investors grew increasingly concerned that the Federal Reserve and other central banks are willing to risk a recession to bring inflation under control, Damian J. Troise and Alex Veiga reported for the Associated Press (AP).

Photo Insert: On the trading floor of the NYSE

The S&P 500 fell 2.5%, with more than 90% of stocks in the benchmark index closing in the red. The Dow Jones Industrial Average fell 2.2% and the Nasdaq composite lost 3.2%. The broad slide erased all the weekly gains for the major indexes. European stocks fell sharply, with Germany’s DAX dropping 3.3%.

The wave of selling came as central banks in Europe raised interest rates a day after the US Federal Reserve hiked its key rate again, emphasizing that interest rates will need to go higher than previously expected in order to tame inflation.

“It’s this coordinated central bank tightening — stocks tend to not do well in that environment,” said Willie Delwiche, investment strategist at All Star Charts.

In the US, the market’s losses were widespread, though technology stocks were the biggest weight on the S&P 500. The benchmark index fell 99.57 points to 3,895.75. The Dow slid 764.13 points to 33,202.22, while the tech-heavy Nasdaq dropped 360.36 points to 10,810.53.

Small company stocks also fell. The Russell 2000 index slid 45.85 points, or 2.5%, to close at 1,774.61.

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