Dow Jones Down By 219 Points Amid Recession Fears

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Dow Jones Down By 219 Points Amid Recession Fears

Dow Jones Down By 219 Points Amid Recession Fears

During Friday's session, most of the US stocks on the Dow Jones were down, which also pushed the Nasdaq down as well. In fact, the recent bearish trend in the Nasdaq caused it to break the 8-week bullish trend, which highlights the negative sentiment surrounding the US stocks.

Overall, Dow Jones Industrial Average (DJIA) was down by 0.6% which is around 219 points. Similarly, the NASDAQ Composite lost 1% of its value while the S&P 500 index lost 0.8%.

Return Of Recession

The reason behind the downside of most US stocks is the return of recession fears. Recently, Jerome Powell gave her testimony in the Senate and the US House about the economy. She made it clear that more rate hikes are due in the next few months with no signs of rate cuts.

In addition, there's a 70% chance of a quarter percentage point rate hike during the July Fed meeting. In theory, these rate hikes will be bearish for the futures market which will also translate into the stock indexes as well.

However, one important thing to note was the counter comments made by other Fed officials. For starters, Raphael (Fed president from Atlanta) said that the top priority of the Fed is to beat inflation. He even called the job one of high priority for the Fed!

Similarly, the Fed president from Chicago highlighted the importance of being patient to ensure that Fed's actions are actually working. He also added monetary policy will take time to start showing its effects.

Tom Barkin from Richmond believes that inflation may not go down on a steady path based on the current action. Mary Daly who is the Fed president from San Francisco said that 2 more rates in 2023 are a very reasonable guess.

Looking ahead, important economic data from the states is due which will be closely watched by both Fed members and the investors to understand what's ahead.

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