Blue-chip stocks plunged to their lowest level since 2020 on Friday, continuing a bad slump that began in August as investors try to grapple with economic head winds in the United States and around the world that are only likely to worsen.
Major stock indexes closed out the week with losses, capping the fifth decline in the past six weeks. The Dow Jones industrial average dropped by 483 points, or 1.6 percent, at Friday’s close, and fell below the 30,000 mark. The index narrowly avoided closing in bear market territory, a drop of 20 percent from its previous high. The S&P 500 slid by 1.7 percent, and the Nasdaq Composite by 1.8 percent.
The Federal Reserve has pledged to get inflation back under control — even if slowing the economy means unemployment rises and households and businesses feel some pain. And although the Fed’s move to raise interest rates this week was widely expected, stock markets are feeling that pain already.
“The Fed’s continued balancing act between restoring price stability in exchange for economic pain has roiled the markets as hopes for a soft landing are quickly fading,” said Nicole Tanenbaum, partner and chief investment strategist at Chequers Financial Management. “Monetary policy is a blunt instrument, and investors are rightly concerned that the Fed may go too far too quickly before it is able to accurately assess the effects of its policy on the economy.”
