Wall Street ends lower, rates rise

<!–

–>

Stocks fell again Thursday, deepening Wall Street’s losses for the week, as central banks around the world hiked interest rates to fight inflation.

The S&P 500 fell 0.8%, its third straight drop. The benchmark index is down about 3% so far this week.

The Dow Jones Industrial Average fell 0.4% and the Nasdaq composite lost 1.4%. The Russell 2000 index of smaller company stocks fell 2.3%, a sign investors are worried about the economy. The major indexes are on pace for their fifth weekly loss in six weeks.

Bond yields mostly rose. The yield on the 2-year Treasury, which tends to follow expectations for Federal Reserve action, rose significantly to 4.11% from 4.02% late Wednesday. It is trading at its highest level since 2007. The yield on the 10-year Treasury, which influences mortgage rates, jumped to 3.70% from 3.51% from late Wednesday.

The latest wave of selling reflects concerns among investors that the Fed might have to get more aggressive than it has been signaling to ultimately get inflation under control, said Barry Bannister, chief equity strategist at Stifel. That scenario is unlikely if prices stabilize and fall, but it could take more than a year for that process to play out, he said.

“The question is, what’s the patience level for both the Fed and the market,” he said.

Central banks in Europe and Asia raised interest rates a day after the Federal Reserve made another big rate hike and indicated that more were on the way.

Britain’s central bank raised its key interest rate by another half-percentage point. Switzerland’s central bank raised its benchmark lending rate by its biggest margin to date, 0.75 percentage points, and said it couldn’t rule out more hikes. Central banks in Norway and the Philippines also raised interest rates.

The Fed and other central banks are raising interest rates in to make borrowing more expensive. The goal is to slow economic growth enough to tame inflation, but not so much that economies slip into a recession. Wall Street is worried that the Fed may be pumping the brakes too hard on an already slowing economy, which makes steering into a recession more likely.

Today’s breaking news and more in your inbox

Leave a Reply

Your email address will not be published. Required fields are marked *