Wall Street’s major indexes were set for a lower begin on Friday, as investors worried about the possibility of an economic slowdown and a hit to corporate earnings from the U.S. Federal Reserve’s aggressive policy tightening steps to calm pricing pressures.
On Wednesday, the U.S. central bank raised interest rates by an amount that had been widely anticipated—75 basis points—and indicated that the trajectory of policy rates would be longer. This crushed expectations that the Fed would get inflation under control soon.
Rick Meckler, a partner at Cherry Lane Investments in New Vernon, New Jersey said that while they were headed towards lower inflation and an economic slowdown, it probably wasn’t falling off a cliff. He added that to some extent that wasn’t going to be seen as good news by investors, who wanted to try and make it through that transition period as quickly as possible.
However, Meckler warned that there wasn’t much good news at the moment, which could cause a last selloff. It was probable that they were getting close to the short-term lows.
The blue-chip index is currently 1.43% away from its mid-June lows, and futures indicate that if losses continue after market opening, the Dow could hit that level once more, marking its lowest point of the year.
In response to concerns over a variety of factors, such as the situation in the Ukraine and tighter financial conditions around the world, the S&P 500 and Nasdaq indexes have already entered a bear market and are down more than 21% and 29%, respectively, so far this year.
A few businesses have provided gloomy outlooks. Most recently, FedEx Corp. and Ford Motor Co. have added to the market’s troubles during a typically bad time.
At 8:26 a.m. ET, the S&P 500 e-minis had down 44.75 points, or 1.19%, the Nasdaq 100 e-minis had fallen 141 points, or 1.22%, and the Dow e-minis had fallen 336 points, or 1.11%.
On Thursday, all three major indices had their third consecutive session of declines, and they are now tracking severe weekly losses due to concerns that the Fed’s aggressive move could push the American economy into a recession.
Mega cap names including Alphabet Inc., Apple Inc., Amazon.com, Microsoft Corp., and Tesla Inc. all fell more than 1% in premarket trading as benchmark Treasury yields reached an 11-year high. Technology and growth companies were among the largest decliners.
