Stocks fell for a third straight day on Thursday after the Federal Reserve raised interest rates sharply, as investors grew increasingly concerned the central bank would push the economy into recession as it struggles to contain rising inflation.
All major stock indexes closed on a declining pace on Thursday. The Dow fell about 2.42%, while the S&P and Nasdaq lost 2.98% and 3.33%, respectively. The S&P and Dow closed down 2.5% and 0.5%, respectively, from their recent closing lows on Thursday.
The S&P 500 lost 0.84% to 3,757.99, while the Nasdaq Composite lost 1.37% to 11,066.81. The Dow Jones Industrial Average closed down 107.10 points, or 0.35%, at 30,076.68.
Bond yields surged again on Thursday, with 10-year and 2-year Treasury yields hitting new multi-year highs, hitting their highest levels since February 2011 and October 2007, respectively.
Thursday’s move came after the Fed maintained its aggressive stance on Wednesday, raising interest rates by another 75 basis points and expected to raise short-term interest rates to 4.4% by the end of 2022. The rest of the world’s central banks followed the Fed’s lead and implemented their own massive overnight rate hikes despite the potential impact on the economy.
Growth-oriented tech and semiconductor stocks traded lower on Thursday amid concerns about slowing economic growth. Industrials and consumer discretionary were the worst-performing sectors of the S&P 500, down about 1.5% and 2.2%, respectively, due to their reliance on the economy.
“The Fed has paved the way for much of the world to continue to raise interest rates sharply, which will lead to a global recession, the severity of which will depend on how long it takes for inflation to fall,” said Ed Moya, senior market analyst at Oanda.
Defensive stocks outperformed drugmakers and consumer staples on Thursday. Shares in Eli Lilly rose 4% after UBS upgraded the stock and said it may be developing the largest drug ever.