U.S. stocks fell sharply on Friday morning as investors continued to worry about more rate hikes by the Federal Reserve that could push the U.S. economy into recession.
The Dow ( INDU ) fell 413 points, or 1.4%, in morning trading. The S&P 500 (SPX) fell 1.8% and the Nasdaq Composite (COMP) was 2% lower.
The Dow remained below 30,000, a level it briefly surpassed on Thursday. If the Dow ends the day below 30,000, it would be the first time it has closed below that barrier since June 17. And a somewhat more significant plunge could land the index at a two-year low on Friday.
Investors don’t have many places to make money right now: In addition to sinking stocks, the bond market is also selling off, pushing U.S. Treasury yields to 11-year highs in recent days. The 10-year yield fell a bit on Friday but remains near 3.7%, and the 2-year yield is above 4.1%. That’s a much better return than you can get from stocks these days, so high bond yields add pressure to the stock market.
Wall Street also remains concerned that the Fed’s rate hike plan could continue to drive up borrowing costs, hurting the corporate earnings that prop up their stock prices. And if the Fed is serious about slowing the economy to get a handle on runaway inflation, a recession could cause real pain for consumers who buy the products publicly traded companies make.
In other words: There’s a lot to worry about on Wall Street. CNN Business’ Fear and Greed Index has fallen steadily into “Fear” mode in recent days and is approaching “Extreme Fear.” Investors don’t see much to smile about on the horizon.
