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Stocks are falling on fears over Fed's higher for longer rates

Published 12/15/2022, 11:55 AM
Updated 12/15/2022, 12:09 PM
© Reuters

By Liz Moyer

Investing.com -- U.S. stocks slumped more than 800 points on Thursday as investors reacted to the Federal Reserve's higher for longer stance on interest rates.

At 11:59 ET (16:59 GMT), the Dow Jones Industrial Average was down 801 points or 2.4%, while the S&P 500 was down 2.5% and the NASDAQ Composite was down 3%.

The Fed put out a fresh set of forecasts on Wednesday that show inflation remaining elevated, while expectations were for growth in gross domestic product to slow while unemployment rises.

The Fed said on Wednesday that its benchmark rate would likely top out above 5%, which is higher than expected just a few months ago, and indicated it wasn’t inclined to pause or pivot to rate cuts anytime soon. That is pressuring stocks as investors had hoped for the turn sometime in 2023.

The central bank raised rates by a half-percentage point, as expected, slower than the pace of hikes at its four earlier meetings this year. Chair Jerome Powell said there are some signs of inflation cooling but not enough to convince the policymakers that inflation was on its way to a sustained direction toward the target 2%.

Traders are expecting another two rate hikes next year, each of at least a quarter of a percentage point.

Data on Thursday indicated a steeper than expected drop in retail sales. Meanwhile, new unemployment claims dropped last week and were lower than expected. Both the European Central Bank and the Bank of England raised rates by a half-percentage point.

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Shares of Tesla Inc (NASDAQ:TSLA) rose 0.3% after CEO Elon Musk disclosed another $3.6 billion in stock sales. The stock is down more than 55% this year. Shares of Netflix Inc (NASDAQ:NFLX) fell 8% after a report that its new ad-supported subscription tier was falling behind the viewership goal it promised advertisers.

Oil fell. WTI was down 1.4% to $76.17 a barrel while Brent futures were down 1.4% to $82.59 a barrel. Gold futures were down 1.7% to $1788.

Latest comments

Welcome to the criminal "late trade" magic show, where losses vanish during every loss.  Fraudulent JOKE.
"losses vanish during every loss"  --  During?
Finally! After a decade of people rightly complaining that the Fed was artificially keeping the stock market inflated, we are returning to a fair market.
Who cares about equity markets, when working people's money is gone due to inflation (FED caused) and now more money will be lost due to recession, again because of FED.
  If you don't care about equity markets, investing.com is the wrong site for you.
No, the market is down because Corporate taxes are due and that is draining a lot of money that could have been invested. Interest rates going up slightly has nothing to do with it.
Corporate taxes are not new.
The ignorance in the world is astounding.
Corporate taxes are also paid quarterly
so no christmas rally then wow
Already happened
today rally is on opposite slide. christmas slide
Santa will be a bit later this year. He's trying to save petrol
What proof is there that 2% inflation must be achieved and maintained, if the cost is layoffs and businesses closing?
Powell when asked yesterday if they would be willling to change the inflation target to 2.5% from 2%, immediately said no. I think the fed means business, there will be pain and 2% inflation will be achieved
What is the cost if 2% inflation is not the target?
It wasn't me forcing the mask, it wasn't me forcing people to vaccinate, it wasn't me telling people what to do, it wasn't me abusing people, it wasn't me dehumanizing people, it wasn't me, it wasn't me who insulted, it wasn't me who divided, it wasn't me who murdered, it wasn't me who committed atrocities, it wasn't me who committed psychopathic-sociopathic attacks that got under the skin of easily influenced people. They did all that. That's why I wrote this book, it's all based on true events. Never let it happen again.
It will be never forgoten. The truth will be preserved.
The space aliens?
  I like to believe a fascist race would destroy itself before reaching interstellar travel level  ;-)
Love it. Every time JP speaks, 😡💩.
Every time?   JP spoke on Nov 30th and market spiked.
now you see why it was going up before the FOMC.. and some people were calling for a Santa rally ffs .. it's trading 101.. sell they push up before news
They who?
Algos, hedge fund managers, trading desks . . .
There was a 1200 point up day a while back.
The laughingstock of the investing world should be down 2,000+.  Criminally manipulated joke.
Smh, market is deep red and you're still whining
Time to print more free money for everyone!
such BS
The Fed has been stating this for months. Just like children, they hear what they want to hear
yeah and they made a non-sense bull market with their non-sense hope. the threshold is coming
Stocks are falling because a colossal amount of technical indicators have been flashing a 20% "CRASH". And recession indicators are rising, just wait for Q4 earnings. There are companies that wont even make it to 50% earnings forecast.
As soon as bonds inverted it was obvious.
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