Dow fell 400 points and broke below 30,000 as recession fears mount
US stocks fell sharply on Friday morning, as investors continued to worry about an interest rate hike from the Federal Reserve that could push the US economy into a recession.
The Dow Jones Industrial Average (INDU) was down 413 points, or 1.4%, in morning trading. The S&P 500 (SPX) was down 1.8% and the Nasdaq Composite was down 2%.
The Dow remained below 30,000 points, a level it broke briefly on Thursday. If the Dow Jones ends the day below 30,000, it will be the first time it has closed below that barrier since June 17. The index could fall to its lowest level in two years on Friday.
Investors don’t have many places to make money right now: In addition to plummeting stocks, the bond market is also selling, sending US Treasury yields to 11-year highs in recent days. The 10-year bond yield fell a bit on Friday but is still 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 higher bond yields add pressure to the stock market.
Wall Street also remains concerned that the Fed’s rate hike plan may continue to increase borrowing costs, hurting corporate earnings that underpin their stock prices. And if the Fed is serious about slowing the economy to control runaway inflation, the recession could cause some real pain for consumers who buy products made by publicly traded companies.
In other words: There is a lot to worry about on Wall Street. CNN Business’s Fear and Greed Index has fallen solidly into “fear” mode in recent days and is approaching “extreme fear”. Investors don’t see much to smile on the horizon.