Stocks fell on Thursday as Wall Street braced for more big rate hikes after the European Central Bank’s increase.
The Dow Jones Industrial Average fell 227 points, or 0.72%. The S&P 500 is down 0.77%, and the Nasdaq Composite is down 0.92%.
Futures fell after the European Central Bank raise interest rates by 0.75 percentage points, lifted it Deposit to 0.75% from 0%, In a largely expected move to curb inflation. Stock futures continued to slide during a question-and-answer session from Federal Reserve Chair Jerome Powell at the Cato Institute as he reiterated that the central bank would do what it takes to combat inflation.
The stock market comes out of a Strong recovery during normal trading hours on Wednesday. The Dow Jones rose about 436 points, or 1.4%. The S&P 500 is up 1.8%, and the Nasdaq Composite is up 2.1%.
It was the best day since August 10 for all three averages, and the Nasdaq snapped a seven-day losing streak.
Even with Wednesday’s rally, stocks are still in a downtrend overall. Concerns about a slowing economy and an increase in interest rates from the Federal Reserve are driving some investors away from the riskier parts of the market.
“Recession risks are rising and we are moving more defensively in our portfolios as a result. However, higher inflation means that traditional ‘risk-off’ strategies such as cash and government bonds can create a drag on total return,” Lauren Goodwin, Economist and Portfolio Strategist In New York Life Investments, in a note to clients.
“We are fully invested in our portfolios, using selective bets within this generally neutral position to build resilience against volatility and inflation. In our equity portfolio, that includes a significant increase in share value and dividend payers,” added Goodwin.
On Thursday morning, investors will get the latest look at the US economy with jobless claims data. Economists polled by Dow Jones expect 235,000 initial unemployment claims, up slightly from 232,000 the previous week.
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