Dow drops 300 points, breaks below 30,000 on fear the Fed is exaggerating its fight against inflation

Stocks fell on Friday and were on track for another losing week as investors feared that the Fed’s aggressive campaign to fight inflation could lead to an economic downturn.

The Dow Jones Industrial Average was down 340 points, or 1.1%, while the Standard & Poor’s was down 1.3%. The Nasdaq Composite lost 1.2%.

Friday saw the fourth consecutive negative session of the major averages, with the Dow Jones dropping below its June closing low of the 30,000 mark. The Federal Reserve decided on Wednesday to raise the benchmark interest rate by 75 basis points and indicated it would do so again at its November meeting.

Bond yields soared this week after the Fed’s actions, with two- and 10-year Treasuries hitting levels not seen in over a decade.

Stocks that have suffered the most in the recession led losses this week with consumer appreciation in the S&P 500 and real estate down at least 6% and energy down more than 7%. Growth stocks including big tech names Apple, Amazon, Microsoft and Meta Platforms are down at least 1% each.

Goldman Sachs S&P 500 target cut for year-end Because rates are rising, with a drop of at least 4% expected from here.

On Friday, investors continued to assess whether the Fed’s recent moves indicate a future deflation, as many believe or are beginning to accept that a recession is in fact on the horizon.

“Based on our clients’ discussions, the majority of equity investors have taken the view that a difficult downside scenario is inevitable and their focus is on the timing, size and duration of a potential downturn, and the investment strategies for these expectations,” Goldman Sachs wrote. David Costin in a note to clients.

The major averages are on the pace of their fifth decline in the past six weeks and are on track to close the week with losses. The Dow has shed about 3.5% this week, while the S&P and Nasdaq are down 4.4% and 4.6%, respectively.

Costco fell about 3%. Although fiscal fourth-quarter revenue and earnings were announced that beat analysts’ expectations, they are seeing a rise in freight and labor costs.

In other news, the pound reached its lowest level in more than three decades against the US dollar after a new economic plan in the UK that included a series of tax cuts rocked the markets.