Wall Street fell as its major indexes continued to decline on Thursday while worries grew that the Federal Reserve’s aggressive interest rate policy will trigger a recession ahead of the carefully expected monthly nonfarm payrolls figures.
Markets temporarily found solace in data showing an uptick in weekly unemployment claims before falling further. It gave rise to hopes that the Fed could lessen the gradual rate hikes it has been conducting since March – the fastest and highest in decades.
The equities market has been slow to comprehend the Fed’s recurrent message that rates would rise longer until it is obvious that inflation is reducing.
Charles Evans, president of the Chicago Fed, was the most recent to discuss the forecast for the institution on Thursday, stating that policymakers anticipate delivering 125 basis points of rate increases by the end of the year due to the weak inflation readings.
According to Jason Pride, chief investment officer for private wealth at Glenmede in Philadelphia, “the market has been gradually catching on to the Fed’s message.”
In order to reduce inflation, the Fed may cause a recession by raising interest rates higher, according to Pride.
According to data, more Americans than expected last week filed new claims for unemployment benefits, but even while demand is starting to slow down due to increased rates, there is still a tight labor market.
Investors will be able to determine whether the Fed changes its plans to raise interest rates on Friday when the nonfarm payrolls report for September is released.
When policymakers meet on November 1-2, the money markets are putting in an 83% chance of a fourth consecutive 75 basis-point rate hike.
Before increasing to a one-week high, the benchmark 10-year Treasury yield first went downward. Ten of the 11 major S&P 500 sectors had declines, with the real estate sector down by 2.9%.
By 2:43 PM EDT, the Nasdaq Composite was down 42.38 points, or 0.38%, to 11,106.26, the S&P 500 was down 27.85 points, or 0.74%, and the Dow Jones Industrial Average was down 284.38 points, or 0.94%, to 29,989.49.
On the NYSE, declining issues outnumbered rising ones by a ratio of 2.05 to 1; on the Nasdaq, the ratio was 1.34 to 1.
The Nasdaq Composite registered 30 new highs and 97 new lows, while the S&P 500 posted three new 52-week highs and 29 new lows.
