The Dow plunges to its lowest level in nearly two years
The S&P 500 has fallen to its lowest level this year, while the Nasdaq is down 20% since March
The Dow Jones Industrial Average fell to its lowest point in nearly two years on Friday, falling 2.5% to 29,335 in afternoon trade, with every component stock recording a decline.
The index has lost more than 13.7% of its value since the Federal Reserve began raising interest rates in March in an effort to contain runaway inflation.
The S&P 500 also nosedived, falling to its lowest level of the year at 3,667, a decline of more than 15% since March. The Nasdaq fell to 10,847, down 20% since March.
The market-wide decline came days after the Fed’s last 75 basis point interest rate hike, which took the current federal funds rate to between 3.00% and 3.25%. The central bank is struggling to reduce the highest inflation rates seen in four decades.
Although annual inflation fell to 8.3% in August, down slightly from July, the overall monthly figure rose by 0.1% from July, a higher figure than expected. That sparked another strong sell-off in markets earlier this month, sending stocks Sept. 13 to their worst trading day since June 2020.
The Fed plans to raise rates further before the end of the year and forecasts a hike to 4.60% in 2023 before any potential cuts, though many economists fear further hikes could tip the economy into a tailspin. total recession. Indeed, Fed Chairman Jerome Powell acknowledged that central bank efforts have helped “decrease in activity of all kindsin the housing market and could push up unemployment.
The majority of economists predict that the United States will enter a recession by mid-2023, according to a survey conducted by the National Association of Business Economics last month, while 20% believe it already has.
President Joe Biden, however, insisted earlier in the month that things are “it’ll be OK« , reminding the population that « the stock market does not necessarily reflect the state of the economy, as you well know.”
« The economy is still strong,” he claimed.”Unemployment is low. Jobs are on the rise. The workmanship is good. I think we are fine.”