The Dow fell more than 200 points as hope for a year-end rally waned

Stocks fell on Monday as recession fears mounted and investors worried that time was running out on the year-end rally.

The Dow Jones Industrial Average lost 278 points, or 0.84%. The S&P 500 fell 1.18% and the Nasdaq Composite fell 1.63%, dragged down by Amazon shares, which fell 3%.

The moves came after another downward week for stocks The Fed raised the short-term interest rate by 50 basis points Higher rates are indicated for longer. Fears that the central bank will push the US economy into recession increased as the group raised its forecast for future hikes above previous forecasts, saying it now expects interest rates to rise to 5.1%.

“As we approach the end of December, investors are still waiting for the Santa Claus rally, with stocks falling for consecutive weeks for the first time since September,” said Chris Larkin, managing director of trading at E*Trade. From Morgan Stanley. “Data showing inflation slowing may have given the market a short-term boost, but the Fed’s firmness with Powell has pushed home the point that interest rates can stay high for an extended period is likely cause for some investors.”

Other central banks are also in hawkish modes, adding to investor fears of a global recession. Last week, the European Central Bank raised interest rates and said it expects more significant increases to come. It is also possible that the Bank of Japan will revisit its 2% inflation target and may start raising interest rates soon.

Shares are set for a dismal month in December after two straight negative weeks. So far, the Dow is set to end the month down more than 3%, and the S&P 500 is down about 4.5% in the same time frame. The Nasdaq Composite Index is on track to drop 5.4% this month.

Investors will also be watching for some earnings reports due later in the week. FedEx and Nike are both scheduled to report earnings results on the Tuesday after the market closes. As recession fears mount, earnings results will become more focused.

“Ranks and inflation may have peaked, but we see that as a warning signal for profitability, a fact we believe remains underappreciated but can no longer be ignored,” Michael Wilson, an equity strategist at Morgan Stanley, wrote in a note Monday.