Dow hits 2022 low as markets sell off on recession fears

Markets sold off worldwide on mounting signs the global economy is weakening just as central banks raise the pressure even more with additional hikes to interest rates. The S&P 500 fell 1.7%, close to its 2022 low. Energy prices also closed sharply lower as traders worried about a possible recession—Treasury yields, which affect rates on mortgages and other kinds of loans, held at multiyear highs. U.K.

European stocks fell just as sharply or more after preliminary data there suggested business activity had its worst monthly contraction since the start of 2021. Adding to the pressure was a new plan announced in London to cut taxes, which sent U.K. yields soaring because it could ultimately force its central bank to raise rates even more sharply.

Crude oil prices tumbled to their lowest levels since early this year on worries that a weaker global economy will burn less fuel. Cryptocurrency prices also fell sharply because higher interest rates tend to hit hardest the investments that look the priciest or the riskiest. More than 90% of stocks in the S&P 500 were in the red, with technology companies, retailers and banks among the biggest weights on the benchmark index. The major indexes are on pace for their fifth weekly loss in six weeks.

The higher rates mean Goldman Sachs strategists say most of their clients now see a"hard landing" that pulls the economy sharply lower as inevitable. The question for them is just on the timing, magnitude and length of a potential recession. In the U.S., the jobs market has remained remarkably solid, and many analysts think the economy grew in the summer quarter after shrinking in the first six months of the year. But the encouraging signs also suggest the Fed may have to jack rates even higher to get the cooling needed to bring down inflation.

Source: Energy Industry News (energyindustrynews.net)

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