December 1, 2022

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Stock futures rise as investors weigh recent earnings streams

The Dow fell more than 200 points as rising yields stoked fears of a recession

Stocks fell on Thursday as interest rates jumped as Federal Reserve officials signaled that raising interest rates to slow inflation is far from over.

The Dow Jones Industrial Average fell 245 points, or 0.7%. The S&P 500 fell 1.2%, while the Nasdaq Composite fell 1.4%.

St. Louis Federal Reserve Chairman James Bullard he said in a speech Thursday that “the policy rate is not yet in an area that can be considered sufficiently restrictive.”

“The change in monetary policy stance appears to have had only limited effects on observed inflation, but market pricing indicates an expectation of subdued inflation in 2023,” Bullard added.

The two-year Treasury yield jumped to 4.437% Thursday morning, stoking fears that higher interest rates could tip the economy into recession.

“I’m looking at a very tight job market,” he said, “and I don’t know how you continue to bring that level of inflation down without some real slowdown, and we might even see a deflation in the economy to get there.” President of the Federal Reserve Bank of Kansas City Esther George to The Wall Street Journal Wednesday.

Recession-prone stocks and rising rates led the losses. Stocks of materials such as US miner Freeport-McMoRan, as well as lithium manufacturer Albemarle, declined. Consumer discretionary stocks fell, including Norwegian Cruise Line Holdings.

“Additional monetary tightening and the cumulative impact of interest rate hikes this year suggest that recession risks remain elevated,” Mark Hefell, chief investment officer at UBS Global Wealth Management, wrote in a note. “We still believe that the macroeconomic preconditions for a sustainable recovery – that interest rate cuts and a decline in growth and corporate profits on the horizon – have not yet been established.”

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