By Liz Moyer
Investing.com -- U.S. stocks were falling amid fears the Federal Reserve’s aggressive actions to tame inflation will push the economy into a recession.
At 10:53 ET (15:53 GMT), the Dow Jones Industrial Average fell 395 points or 1.2%, while the S&P 500 fell 1.3% and the NASDAQ Composite was down 1%. The indexes were heading toward their second straight weekly decline and the first negative December in four years.
This week, the Fed signaled interest rates would stay higher for longer, and that it wasn’t done with raising rates and holding them higher for longer. The Fed 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.
Today, there will be fresh data on manufacturing and services for investors to digest. 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.
Adobe Systems Incorporated (NASDAQ:ADBE) shares were rising 4.6% after the company issued a forecast for first-quarter profit that was above expectations. Darden Restaurants (NYSE:DRI) stock fell 3.7% despite beating expectations and raising its outlook.
Oil was down sharply. Crude Oil WTI Futures fell 3.3% to $73.56 a barrel, while Brent Oil Futures crude fell 3.4% to $78.47 a barrel. Gold Futures rose 0.5% to $1797.