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Stocks are falling on recession fears as Santa rally hopes fade

Published 12/16/2022, 12:11 PM
Updated 12/16/2022, 12:23 PM
© Reuters.

By Liz Moyer

Investing.com -- U.S. stocks were falling as fears about a possible recession threaten to kill any Santa Claus rally. 

At 12:16 ET (17:16 GMT), the Dow Jones Industrial Average was down 461 points or 1.4%, while the S&P 500 fell 1.6% and the NASDAQ Composite was down 1.3%. The indexes were heading toward their second straight weekly decline and the first negative December in four years. 

The gloomy holiday mood is being stoked by fears about the Federal Reserve's aggressive actions to stop inflation in its tracks, with the help of other central banks around the world. The Bank of England and the European Central Bank joined it in saying rates would stay higher for longer.

This week, the Fed signaled it wasn’t done with raising rates and even indicated its benchmark rate would probably rise above 5% next year, which is higher than investors expected just a few weeks ago.

Now, the policy rate is expected to rise to 5.1% next year, the Fed said, a level it hasn’t reached since 2007. Gross domestic product growth is expected to slow, the Fed said, and unemployment is expected to rise.

While the Fed slowed the pace of its rate hiking to a half percentage point, it isn’t expected to stop raising rates next year. The market is anticipating at least two increases of at least a quarter point each next year.

Manufacturing PMI data on Friday was slower than expected, reading 46.2 versus the expected 47.7. Services PMI was 44.4, slower than the 46.8 expected. Data on Thursday showed retail sales slowed in November more than expected while the labor market continued to show strength as unemployment claims unexpectedly fell.

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Adobe Systems Incorporated (NASDAQ:ADBE) shares were rising 3.3% after the company issued a forecast for first-quarter profit that was above expectations. Darden Restaurants (NYSE:DRI) stock fell 4% despite beating expectations and raising its outlook.

Latest comments

Here comes that power hour push, right on schedule! For what? News, anything? Nope. Big money pumping before weekend, as usual
It amazes me that people still haven't figured this game out. The fed is just noise, it's not even real it does nothing. The market is a cycle and we have a long way to the bottom still... enjoy the ride
Yup.  The Fed is a background actor in the economy.  Like water and electricity for our homes.  We're should just expect them to work and not obsess over them.
bull, bull, bull.
s, s, s
Santa rally 🤡
One of these biden  days. The Fed cannot stop inflation, while old fool continues wasting money.
I'm not defending them either. Both parties are worthless, the Left is just worse
first Last... you've done enough for today. You've earned your pay from the hacks. Have a nice weekend
More than one issue is convoluted in this thread. In 2020. the federal reserve was purchasing 40B in mortgage back securities monthly. No one in the finance committees seemed to recognize that this was a triple threat accelerating listing prices, inflation, and homelessness. It was either an overlooked issue from lack of insight or a Pandora's box that finance committees didn't want to open. The federal reserve was also purchasing 80B in treasuries monthly in addition to corporate bonds and ETFs for corporate bonds. Prior to COVID19, tax and rate cuts in 2018 and 2019 substantially increased the national debt and the seemingly forgotten inflation in 2019.
all fed need to quit. they didn't find the balances, just do one way or another, and think it will be fine
The Fed was designed to deal with economic crises caused by economic reasons, not crises caused by military or pandemic reasons.
not true. It was designed to prevent, or minimize, the occurrence of runs on the banks, regardless of the reason
  The Fed members are economists/bankers, not generals or doctors.
The fraudulent floor appears under the losses, as Wall Street sharpens the financial knife once again.
all nad things happens because of powell.he said inflation is ok last year. and now he raise rate so fast and break all market.useless. he have to lose his job
powell said Inflation is caused by the supply chain provlem and is temporary last year . dont you remember? search internet
  That's not "ok".
all they do just to break oil prices..and made achieve..need to another 10 point falling then they will say now its over and time to think pivot
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