Dow ends worst day in three months, down more than 700 points as recession fears grow

Stocks fell sharply on Thursday after new data showed retail sales fell more than expected in November, fueling fears that the Federal Reserve’s relentless rate hikes are pushing the economy into recession.

The Dow Jones Industrial Average fell 764.13 points, or 2.25%, to 33,202.22 in its worst day since September as hopes for a year-end rally faded. The S&P 500 fell 2.49% to 3,895.75, bringing December’s decline to about 4.5%. The Nasdaq Composite fell 3.23% to 10,810.53 as the tech-heavy index extended its 2022 losses to 31%.

The sell-off was widespread, with only 14 stocks in the S&P 500 trading in positive territory. Mega-cap tech stocks are down, stocks are down Apple: and: The alphabet down more than 4%, while Amazon: and: Microsoft were down more than 3%. the shares of Netflix: fell 8.6% after a Digiday report said the streaming company was offering to refund advertisers after missing viewership targets.

A disappointing retail sales report says inflation is hurting consumers. Retail sales fell 0.6% in November, according to the Commerce Department. That was a bigger loss than the Dow Jones estimate of a 0.3% decline.

The sell-off began on Wednesday in the wake of the Fed’s latest boost to its overnight lending rate. The central bank also said it would keep raising interest rates until 2023 and forecast its fed funds rate to peak at a higher-than-expected 5.1%. With Wednesday’s half-percentage-point hike, the target range for rates is currently 4.25%-4.5%, the highest in 15 years.

“The stock market’s reaction is now taking into account the recession and rejecting the possibility of a soft/soft landing that Powell recently mentioned. [Brookings Institution]Quincy Crosby, LPL Financial’s chief global strategist, wrote Thursday.

“The tug-of-war between the Fed and the markets is exclusively on the market’s side. the slowdown is not ‘transient’ and the Fed will have to act through 2024,” Crosby added.

The Dow closed below 34,000 on Wednesday, and then the sell-off strengthened after Thursday’s poor retail sales data. Treasury yields continued to defy the Fed and fall on fears that the central bank is going too far. The 10-year yield fell below 3.5%.

Bank shares also fell as recession fears grew. JPMorgan Chase lost about 2.5%.