Stocks fell on Friday and were on pace for another losing week as investors feared the Federal Reserve’s aggressive hike campaign to fight inflation could lead to an economic slowdown.
The Dow Jones Industrial Average fell 470 points, or 1.55%, while the S&P 500 slipped 1.8%. The Nasdaq Composite lost 1.8%.
Friday marked the fourth consecutive negative session for the major averages, with the Dow Jones falling below its June closing low and the 30,000 mark. The Fed on Wednesday decreed another large rate hike of 75 basis points and indicated that she would do another at her November meeting.
Bond yields soared this week on Fed actions, with 2- and 10-year Treasury yields hitting highs not seen in more than a decade.
Goldman Sachs cut its year-end S&P 500 target due to rising rates, predicting at least a 4% drop from here.
Stocks positioned to suffer the most from a recession led the losses this week with the S&P 500 consumer discretionary sector down 7%. Energy is down more than 8% due to falling oil prices. Growth stocks including big tech names Apple, Amazon, Microsoft and Meta Platforms fell on Friday.
“Based on our discussions with our clients, a majority of equity investors have taken the view that a hard landing scenario is inevitable and are focused on the timing, magnitude and duration of a potential recession and investment strategies for those prospects,” Goldman Sachs wrote. ‘ David Kostin in a note to clients.
The major averages are on the verge of their fifth drop in the last six weeks and on track to end the week with losses. The Dow Jones fell around 3.5% this week, while the S&P and Nasdaq fell 4.4% and 4.6%, respectively.
Separately, the pound hit a new more than three-decade low against the US dollar after a new UK economic plan including a series of tax cuts rattled markets.