Wall Street’s main indexes fell on Friday as investors fretted over the prospect of an economic downturn and a hit to corporate earnings from the Federal Reserve’s aggressive policy tightening moves to quell inflation.
The Dow breached its mid-June lows on an intraday basis to touch 29,643.93 points and hit a near-two year low.
The S&P 500 and the Nasdaq are also closing in on mid-June lows, their weakest points for the year.
In midday trading, the Dow Jones Industrial Average was down nearly 700 points, or 2.3%, at 29,392, the S&P 500 was down 91 points, or 2.4%, and the Nasdaq Composite was down more than 200 points, or 2.4%.
All the three indexes were set for sharp weekly losses.
Both the S&P 500 and the Nasdaq are already in bear market and down more than 22% and 30%, respectively, so far this year, amid worries about a host of issues including the Ukraine conflict and tightening financial conditions across the globe.
The central bank raised rates by a widely expected 75 basis points on Wednesday and signaled a longer trajectory for policy rates, dashing hopes that the Fed expects to get inflation under control in the near term.
“The most recent Fed actions leave us with the feeling that the end of the rate rises is not near,” said Rick Meckler, a partner at Cherry Lane Investments in New Vernon, NJ.
“There is very little positive news right now and it could lead to a sort of a final selloff … it’s certainly possible that we could be approaching the near-term lows.”
Dire outlooks from a handful of companies – most recently FedEx and Ford Motor — have also added to woes in a seasonally weak period for markets.
Goldman Sachs cut its year-end 2022 target for the benchmark S&P 500 index by about 16% to 3,600 points, a 2.5% decline from current levels.
Technology and growth stocks slid with megacap names including Alphabet, Apple, Amazon, Microsoft and Tesla all down more than 1%.
Costco Wholesale shed 2.4% after the big-box retailer reported a fall in its fourth-quarter profit margins.
The CBOE volatility index, also known as Wall Street’s fear gauge, rose to 28.72 points.