Markets are worried that the Fed and other central banks may stumble along the narrow path of hiking interest rates enough to slow high inflation.
Stocks slumped again on Wall Street Thursday, erasing another 3.3% from the S&P 500 and bringing the index 23.6% below the peak it reached in January.
The renewed selling came a day after a brief reprieve for markets when the Federal Reserve delivered a huge interest rate increase in its effort to fight back inflation. Markets are worried that the Fed and other central banks may stumble along the narrow path of hiking interest rates enough to slow high inflation but not so much that they cause a recession.
“Another concern is that with the change in policy, there’s been weakening economic data already,” said Bill Northey, senior investment director at U.S. Bank Wealth Management. “That raises the odds of a recession in the latter part of 2022 into 2023.”
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