The Dow Jones Industrial Average closed down more than 300 points on Thursday (October 6) as markets were weighed down by concerns that a rapid rate hike by the US Federal Reserve (Fed) will push the US economy into recession. While investors eye the release of US non-farm payrolls today.
The Dow Jones Industrial Average closed at 29,926.94, down 346.93, or -1.15%, the S&P500 closed at 3,744.52, down 38.76, or -1.02%, and the Nasdaq closed at 11,073.31, down or -75.63%.
The Dow eventually fell by 30,000 amid concerns about the economic impact of the Fed’s faster rate hikes.
Minneapolis Fed President Neil Cashery said: The Fed is unlikely to slow its rate hikes in the near future. Until there is evidence that core inflation has slowed. There is currently very little evidence that inflation has passed its peak. Meanwhile, he said a Fed rate hike could hurt financial markets. But for the Fed to make policy changes just to help the market. It is not something that will happen easily.
Although St Louis Fed President James Bullard predicted that the Fed board may raise interest rates another 1.25% before the end of 2022 as inflation remains at a very high level.
Markets were also pressured by rising yields on the 10-year US Treasury, as the bonds are used as a reference for global bond prices. including US mortgage interest rates The surge in yields on these bonds will give consumers less money to spend. while the cost of paying off mortgage loans increases AND companies will face higher costs of paying off debts. causing these companies to reduce their investment and reduce dividend payments to investors
Ten of the 11 stocks in the S&P500 closed in negative territory, led by real estate and technology stocks. Both are interest rate sensitive stocks. Jones Lang LaSalle was down 1.13 percent, American Realty Investors was down 0.53 percent, Amazon was down 0.54 percent, and Microsoft shares were down. Down 0.97% Indian stocks down 0.60%.
However, energy stocks rose against the market. Response to the decisions of the Petroleum Exporting Countries (OPEC) and its allies. or OPEC Plus reducing production by 2 million barrels per day Exxon Mobil was up 2.97 percent, Halliburton was up 1.95 percent, ConocoPhillips was up 1.47 percent and Chevron was up 1.84 percent.
Investors are eyeing the release of September US non-farm payrolls today. Although analysts predict that the number of jobs will increase by only 265,000 in September. After raising 315,000 jobs in August The unemployment rate in September is expected to remain stable at 3.7%.