Stock Market Today: Dow Bears sharpen its claws as recession fever rises

Stock Market Today: Dow Bears sharpen its claws as recession fever rises

Written by Yassin Ibrahim – The Dow closed sharply lower for the week and briefly fell into bear market territory on Friday as investors feared the prospect of a deeper and darker recession amid growing concerns that the Federal Reserve will outpace higher interest rates.

The index fell 1.6%, or 486 points, and fell into bear market territory on the day as losses exceeded 20% from the January peak. It fell 1.7 percent to close at its lowest level since June. It declined by 1.8%.

Energy prices fell 6%, pressured by a stronger dollar and fears that a deeper global recession could hurt energy demand.

Marathon Petroleum Corp. (NYSE:), Occidental Petroleum Corporation (NYSE:), and Kinder Morgan Inc (NYSE:) each down more than 4%.

Recession fears intensified this week after Federal Reserve Chairman Jerome Powell indicated that the central bank will remain on a mission to curb inflation at the expense of economic growth. The Fed pushed its rate hike forecast to 4.4% for 2022, up from 3.4% previously, indicating more massive hikes ahead.

With the Fed raising interest rates to a slowing economy still well above trend, Morgan Stanley warned that weakness in economic activity would spread more widely. The bank cut its US growth forecast to 0% in 2022 from 0.2% previously and its forecast for 2023 to 0.5% from 1.3% previously.

The Dow was also down due to a more than 5% drop in Boeing (NYSE:) after the airline said it had reached a $200 million settlement over charges that misled investors over the 737 Max accidents.

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Consumer stocks, which are also highly vulnerable to slowing economic growth, fell more than 2% as investors priced in weak consumer spending. Amazon (NASDAQ:) stock fell more than 3%, while travel and leisure stocks deepened their losses this week, with cruise line and casino stocks under heavy pressure.

Tech stocks also played a large role in the broader market crash.

Apple (NASDAQ :), Meta Platforms (NASDAQ :), Alphabet Inc (NASDAQ :), and Microsoft (NASDAQ :)) are down more than 1%.

Meanwhile, FedEx (NYSE:) fell more than 3% as Wall Street cast doubt on whether the shipping giant’s cost-saving measures will be enough to offset lower freight volumes and higher inflation. The company released financials that did not come up with estimates, but announced plans to increase freight rates and achieve total cost savings from $2.2 billion to $2.7 billion.

Deutsche Bank said in a note that “the cost savings figures, while impressive on a major basis, are likely to be nearly insufficient in the context of high inflation and low volumes.”

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