Stocks plummeted Monday as recession fears soared and investors worried time is running out for a year-end rally.
The Dow Jones Industrial Average lost 278 points or 0.84%. The S&P 500 declined 1.18%, and the Nasdaq Composite slumped 1.63%, weighed down by shares of Amazon, which dipped 3%.
The moves followed another down week for stocks after the Federal Reserve delivered a 50 basis point short-term interest rate hike and signaled higher-for-longer rates. Fears that the central bank will cause the U.S. economy to tip into a recession increased as the Fed upped its forecast for future hikes above previous expectations, saying that it now expects to increase rates to 5.1%.
“As we near the end of December, investors are still waiting on that Santa Claus Rally, with stocks coming off back-to-back down weeks for the first time since September,” said Chris Larkin, managing director of trading at E*Trade from Morgan Stanley. “Data showing inflation cooling may have given the market a short-lived boost, but the Fed standing firm with Powell driving home the point that rates could remain elevated for quite a while likely grounded some investors.”
