Written by Yassin Ibrahim
Investing.com – The Dow snapped some losses on Thursday, but remained steady in the red as market growth sectors including consumer and technology stocks faltered amid concerns that the Federal Reserve’s hawkish stance could push the economy into recession.
It fell 0.3% or 107 points, it fell 1.4%, and it fell 0.9%.
The Fed’s 0.75% on Wednesday was largely expected, but its updated forecast, which points to further rate hikes, raises the risk of a recession.
“The higher the Fed’s target peak, the higher the risk of a recession,” Morgan Stanley said in a note. She added that a material slowdown in job gains could persuade the Fed to “take pressure off the pace of policy tightening”.
The bond market appears to be rooming for an increased risk of a recession amid deeper volatility. The curve between 2-year and 10-year Treasury yields inverted to levels not seen since 1982.
Growth sectors of the market—typically higher-value stocks that are susceptible to a price environment—such as technology and consumer stocks led the broader market lower.
But the move lower in big tech appears to be attracting lower buyers as tech giants moved away from session lows. Apple (NASDAQ 🙂 and Amazon.com Inc (NASDAQ 🙂 were lower, while Meta Platforms Inc (NASDAQ :)), Alphabet (NASDAQ :), and Microsoft Corporation (NASDAQ) were in green.
In addition to rising rates, consumer stocks continued to falter from rising geological tensions as Russia’s partial mobilization clouded hopes of a resolution to the conflict.
Healthcare stocks avoided selling, led by Merck & Company Inc (NYSE:), Bristol-Myers Squibb Company (NYSE:) and Eli Lilly and Company (NYSE:) with the latter boosted by an upgrade from UBS.
UBS upgraded Eli Lilly and Company to buy from neutral and raised its target price for the stock to $363 from $335, citing optimism about the drugmaker’s newly approved type 2 diabetes drug. The drug not only treats type 2 diabetes, but has also been shown to treat obesity.
Energy stocks were also in the green, buoyed by higher oil prices amid concerns that an escalation of the war in Ukraine could affect supplies.
Valero Energy NYSE: Schlumberger (NYSE:) and Marathon Petroleum Corp. (NYSE:) were among the biggest gainers in the energy sector.
in other news, Robinhood Markets (NASDAQ 🙂 Gains reversed to negative despite reports that the Securities and Exchange Commission won’t prohibit payment for order flows – a significant source of the trading platform’s revenue.
Weakness in the broader market has pushed stocks into oversold territory, setting the stage for a volatile period ahead.
“Thus, we continue to anticipate a choppy trajectory for stocks in the coming weeks – noting that after the declines of yesterday and today, stocks are mostly pressure once again into oversold territory,” said Janie Montgomery-Scott.