Dow tumbles on recession fears. So much for a Santa Claus rally – CNN
New York
CNN
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Christmas is just ten days away, and investors are still hoping for a Santa Claus rally. There has been little holiday cheer on Wall Street so far this month.
The Dow tumbled more than 700 points, or 2.1%, Thursday, and it is down about 4% in December following solid gains the previous two months. The S&P 500 fell 2.2% and the Nasdaq was 2.5% lower Thursday. The S&P 500 is now off more than 4% for the month while the Nasdaq has sank 5%.
Stocks were sliding Thursday as investors continued to fret about the latest economic forecasts from the Federal Reserve. The Fed raised rates by “just” a half of a percentage point Wednesday, as expected. The Bank of England and European Central Bank followed suit Thursday morning with half-point hikes of their own.
But the Fed also indicated it anticipates the US economy will barely grow in 2023. The Fed’s new forecasts also call for a bigger jump in the unemployment rate, larger rise in consumer prices and higher interest rates than it expected in September.
It didn’t help that the government also reported a much bigger drop in retail sales for November than expected on Thursday. All of this has led some to worry about the dreaded stagflation scenario of stagnant growth and persistent inflation.
Those fears may not become reality. The economy could avoid dipping into a recession and inflation pressures may wind up cooling faster than expected. But at the very least, market volatility may be back for the foreseeable future.
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