Dow futures drop 350 points, heading for a big loss week on fear the Fed is overdoing it

Stock futures fell on Friday to close out another week of losses as investors feared that the Federal Reserve’s aggressive hike campaign to fight inflation could lead to an economic slowdown.

Dow Jones Industrial Average futures were down 359 points, or 1.2%. S&P 500 futures lost 1.3%. Nasdaq 100 futures were down 1.4%.

Friday is set to be the fourth consecutive negative session for the major averages. The Federal Reserve decided on Wednesday to raise interest rates by three-quarters of a point, and indicated it would do so again at its November meeting.

Bond yields rose this week due to the Fed’s actions as prices of 2-year and 10-year Treasuries reached levels not seen in over a decade. Stocks that have suffered the most in the recession led the losses this week with the SPDR consumer discretionary fund dropping more than 5%. The SPDR fund for Real Estate Select Sectors is down 6%.

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

“You just got this volatility that no one seems to be able to control,” said Tim Lesko, senior wealth advisor at Mariner Wealth Advisors.

Lesko said more investors are beginning to accept that a recession may be on the horizon after the Federal Reserve’s decision this week to raise interest rates by 75 basis points and FedEx CEO Raj Subramaniam. saying on CNBC last week that He thought someone was imminent. Once that happens, Lesko said, investors will react differently.

“At some point, they’ll find out that a recession doesn’t mean the end of the world, and they’ll start building on stocks again,” he said. “But for now, we are acting as if the sky is falling.”

Major averages are in full swing for their fifth decline in the past six weeks. The Dow has shed about 2.4% this week and is close to its 2022 closing low hit in June. The S&P and Nasdaq have seen slightly sharp declines, down 3% and 3.3%, respectively, for the week so far. The S&P 500 is down 21% so far in 2022.

Costco was down about 3% in pre-market trading on Friday. Although the retailer reported fiscal fourth-quarter revenue and profits that beat analysts’ expectations, it’s seeing a rise in shipping and labor costs.