Dow plunges in perfect storm for stocks

Federal Reserve sees rates reaching 5.1% in 2023

Investors dumped stocks on Thursday as more headwinds emerge for the U.S. economy as the Federal Reserve stays the course in raising interest rates. 

The Dow Jones Industrial Average lost 764 points, or 2.2%, as the broader markets faced the worst session since November. 

Dow Jones Industrial Average

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IBM and Apple paced the Dow's selloff, while Verizon remained in the green.

Ticker Security Last Change Change %
IBM INTERNATIONAL BUSINESS MACHINES CORP. 181.90 +0.32 +0.18%
AAPL APPLE INC. 165.84 +0.84 +0.51%
VZ VERIZON COMMUNICATIONS INC. 38.60 -1.89 -4.67%

The Nasdaq Composite shed over 3.4%, weighed down by Netflix and Meta. 

Nasdaq Composite

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Ticker Security Last Change Change %
NFLX NETFLIX INC. 554.60 -0.44 -0.08%
META META PLATFORMS INC. 481.73 +0.66 +0.14%

And all 11 of the S&P’s largest sectors fell, led by tech, materials and industrials, while energy and utilities fell the least. 

Ticker Security Last Change Change %
XLK TECHNOLOGY SELECT SECTOR SPDR ETF 194.25 +1.72 +0.89%
XLB MATERIALS SELECT SECTOR SPDR ETF 89.05 +0.09 +0.10%
XLI INDUSTRIAL SELECT SECTOR SPDR ETF 121.38 +0.91 +0.76%

S&P 500

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Weak readings on retail sales and manufacturing sent ripples through the markets 24 hours after Fed policymakers said interest rates will rise to 5.1% in 2023, higher than initial forecasts, in the quest to bring the 7.1% inflation rate down. 

FED SLOWS INTEREST RATE INCREASES WITH 50-BASIS-POINT HIKE, BUT SIGNALS MORE TO COME 

"The largest amount of pain, the worst pain would come from a failure to raise rates high enough and from us allowing inflation to become entrenched in the economy," Fed Chairman Jerome Powell said Wednesday during his press conference following the central bank's 50-basis-point rate hike.

Bank of America strategists Michael Gapen, Mark Cabana and John Shin collectively predict a recession next year.

"We agree and continue to look for a recession in 1H 2023 and a sharper rise in the unemployment rate than the median FOMC member projects," they wrote. Currently, the Fed expects the unemployment rate to reach 4.6% next year, up from November's 3.7%. 

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