U.S. stocks fell sharply on Friday as investors continued to worry about even more rate hikes from the Federal Reserve that could push the U.S. economy into a recession.
The Dow (INDU) fell 662 points, or 2.2%, early in the afternoon. The S&P 500 (SPX) and Nasdaq (COMP) Composite each fell 2.4%.
The Dow Jones is on track to close the day below 30,000 points for the first time since June 17. A bigger drop could send the index to a two-year low on Friday.
Investors don’t have many places to make money at the moment: In addition to stocks sinking, the bond market is also selling off, pushing US Treasury yields to 11-year highs in recent days . The 10-year rate fell a little on Friday but remains close to 3.7%, and the 2-year rate is above 4.1%. That’s a much better return than you can get with stocks these days, so high bond yields add pressure to the stock market.
Wall Street also remains concerned that the Fed’s rate-hike plan could continue to drive up borrowing costs, hurting corporate earnings that support their stock prices. And if the Fed is serious about slowing the economy to rein in runaway inflation, a recession could cause real pain for consumers who buy the products made by publicly traded companies.
The market sell-off could continue for some time as stock valuations are squeezed by Fed actions, said Ivan Feinseth, chief market strategist at Tigress Financial Intelligence. Investors “may not see a bottom until there is confirmation that inflation indicators have come down significantly,” he added.
In other words: there is cause for concern on Wall Street. CNN Business’ Fear and Greed Index has fallen solidly into “Fear” mode in recent days and is approaching “Extreme Fear.” Investors see nothing to smile about on the horizon.