Stock futures were lower on Friday to cap another losing week as investors feared the Federal Reserve’s aggressive hiking campaign to fight inflation could lead to an economic slowdown.
Dow Jones industrial average futures fell 300 points, or 1%. S&P 500 futures lost 1.1%. Nasdaq 100 futures fell 1.3%.
Friday is set to be the fourth negative session in a row for the major averages. The central bank implemented another super-sized rate hike of three-quarters of a point on Wednesday and indicated it would do another at its November meeting.
Bond yields rose this week on the Fed’s actions as the 2-year and 10-year Treasury rates hit their highest levels in more than a decade. Stocks most vulnerable to recession led the Consumer Discretionary Sector SPDR fund to lose more than 5% this week. The Real Estate Select Sector SPDR Fund was down 6%.
“You’ve got this volatility that nobody can interfere with,” says Tim Lesko, senior wealth advisor at Mariner Wealth Advisors.
After 75 basis points and FedEx CEO Raj Subramaniam’s decision this week, Lesko said, more investors are beginning to accept that a recession may be on the horizon. said on CNBC last week He hoped one would be soon. Once that happens, Lesko said, investors will react differently.
“At some point, they’ll figure out that a recession doesn’t mean the end of the world, and they’ll start being creative in stocks again,” he said. “But right now, we’re acting like the sky is falling.”
The major averages are on pace for a fifth decline in the past six weeks. The Dow has dropped about 2.4% this week and is nearing its 2022 final low in June. Both the S&P and Nasdaq saw slightly sharper declines, down 3% and 3.3%, respectively, week-to-date. The S&P 500 is down 21% so far in 2022.
Costco fell 3% in premarket trading Friday. Although the retailer posted fiscal fourth-quarter revenue and earnings that topped analysts’ expectations, it saw higher inventory and labor costs.