Wall St. slumps on rate hike, recession worries

09/23/2022 | 05:46pm

STORY: Wall Street's main indexes ended the week sharply down as rattled investors continued to reposition themselves amid fears the U.S. Federal Reserve's hawkish rate policy will help tip the American economy into recession.

The Dow fell 1.6%, the S&P shed 1.7%, while the Nasdaq lost 1.8%.

The Dow avoided ending more than 20% lower than its Jan. 4th all-time closing peak, which would have put it in bear market territory.

The S&P and Nasdaq are already in a bear market.

A half dozen central banks, including in the U.S., delivered rate hikes this week to fight inflation, but it was the Fed's signal that it expects high U.S. rates to last through 2023 that caught markets off guard.

Michael Landsberg is chief investment officer at Landsberg Bennett Private Wealth Management.

"I think the scenario now I tell people would be, is, inflation is a little bit of yesterday's story. You need to be positioning for what's going to happen with these raises. Are we gonna have a recession - and I think we're already in a recession. What does that look like for investors? Is to position themselves for where the puck's gonna be, not where the puck is."

Oil and gas-related stocks were pummeled by the decline in crude prices, which fell in response to concerns about demand in a recessionary environment and the strong U.S. dollar.

Rate-sensitive technology and growth stocks fell, including Alphabet, Apple and Amazon.

And shares of Costco dropped after the big-box retailer reported a fall in its fourth-quarter profit margins.

Reuters 2022
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