Stocks fell on Thursday as Wall Street braced for bigger rate hikes going forward following the ECB’s hike.
The Dow Jones industrial average was down 130 points, or 0.41%. The S&P 500 fell 0.56%, and the Nasdaq Composite fell 0.72%.
The future slipped after the European Central Bank Raised the interest rate by 0.75 percent. Its uplifting 0% to 0.75% deposit, A much-anticipated move to curb inflation. Stock futures continued to fall during a question-and-answer session with Federal Reserve Chairman Jerome Powell at the Cato Institute, where he reiterated what the central bank needs to do to fight inflation.
Stock market goes down a A solid rebound during regular trading hours on Wednesday. The Dow gained about 436 points, or 1.4%. The S&P 500 added 1.8%, and the Nasdaq Composite rose 2.1%.
It was the best day for all three averages since August 10, and the Nasdaq snapped a seven-day losing streak.
Even with Wednesday’s rally, stocks are down overall. Concerns about a sluggish economy and further rate hikes from the Federal Reserve are keeping some investors away from riskier parts of the market.
“Recession risk is increasing, and as a result we are moving more defensively in our portfolios. However, high inflation means traditional ‘risk off’ strategies such as cash and government bonds can create a drag on total returns,” said Lauren Goodwin, economist and portfolio strategist at New York Life Investments. The expert said in a note to clients.
“We remain fully invested in our portfolios, leveraging selected exposures within that overall neutral-risk position to build resilience against volatility and inflation. In our equity sleeve, this includes a strong overweight to equity and dividend-paying value,” added Goodwin.
On Thursday morning, investors will get the latest look at the US economy with jobless claims data. Economists polled by Dow Jones expected 235,000 initial jobless claims, up from 232,000 the previous week.
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