The Dow Jones Industrial Average fell 764.13 points, or 2.25%, to 33,202.22 – its worst day since September as hopes for a year-end rally faded. The S&P 500 fell 2.49% to 3,895.75, extending its decline for December to about 4.5%. The Nasdaq Composite fell 3.23% to 10,810.53 as the tech-heavy index extended its 2022 losses to nearly 31%. The disappointing retail sales report showed that inflation is weighing on consumers. Retail sales fell 0.6 percent in November, according to the Commerce Department. That was a bigger loss than the Dow Jones estimate of a 0.3% drop. The sell-off began on Wednesday in the wake of the Fed’s latest push in the overnight lending rate. The central bank also said it would continue to raise interest rates until 2023 and forecast its funds rate to peak at a higher-than-expected 5.1 percent. With Wednesday’s increase of half a percentage point, the target price range is currently 4.25% to 4.5%, the highest in 15 years. “The stock market reaction is now bearish on recession and dismisses the possibility of the ‘soft/soft’ landing recently mentioned by Powell in [Brookings Institution]Quincy Krosby, chief global strategist at LPL Financial, wrote Thursday. “The tug-of-war between the Fed and the markets is clearly on the market’s side: the slowdown is not ‘transient’ and the Fed will be forced to act before 2024,” Crosby added. The Dow closed below 34,000 on Wednesday, then selling intensified on Thursday after poor retail sales data. Bond yields continued to defy the Fed and fall on fears the central bank will go too far. The 10-year yield fell below 3.5%. Bank stocks also fell as recession fears rose. JPMorgan Chase lost about 2.5%.
