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S&P 500 opens flat following Wednesday’s post-Fed rout

Markets will face recession 'decision time' once it hits prior lows, says SoFi's Liz Young

The S&P 500 opened flat on Thursday after the main averages got here off a day of steep losses following one other giant charge hike from the Federal Reserve.

Stocks had been largely decrease in early morning trading, with the Dow Jones Industrial Average final down 103 factors, or 0.34%. The S&P 500 traded 0.5% decrease and the Nasdaq Composite dipped 0.76%.

Shares of Robinhood jumped amid a report that the SEC will not ban cost for order circulate. On the economic entrance, the newest information on weekly jobless claims got here in barely higher than expectations.

Stocks dropped on Wednesday, persevering with the latest sell-off development as traders evaluated the Fed’s newest feedback. The Dow slumped 522 factors to its lowest stage since June 17. The S&P 500 and Nasdaq Composite shed greater than 1.7% every, placing each averages at their lowest ranges since June 30 and July 1, respectively.

The huge drop in equities got here throughout a risky trading session following the Fed’s third consecutive 0.75 share level charge improve.

“Yesterday’s FOMC meeting was a tough pill for markets to swallow and I think this likely continues for three reasons that came out of the Fed,” mentioned Saira Malik, Nuveen’s chief investment officer, citing larger rates of interest, inflation, and unemployment.

Policymakers on Wednesday pledged to proceed elevating charges as excessive as 4.6% in 2023 earlier than pulling again within the combat in opposition to inflation, spurring fears on Wall Street that the economic system might tip right into a recession because the central financial institution goals to sluggish economic development.

The Fed expects to lift its year-end charge to 4.4% in 2022, persevering with aggressive motion in opposition to rising costs by the rest of the yr. 

Some traders have grown more and more involved in regards to the Fed’s aggressive mountain climbing agenda. DoubleLine Capital CEO Jeffrey Gundlach mentioned Wednesday on CNBC’s “Closing Bell: Overtime” that the Fed must sluggish its speedy tempo of tightening

“Monetary policy has lags that are long and variable, but we’ve been tightening now for a while,” he mentioned, noting that the influence of the tightening might result in a recession.

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