Stock market today: Dow slips below 30,000, Tesla falls, Amazon falls

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Federal Reserve Chairman Jerome Powell.

JIM WATSON/AFP via Getty Images

The stock market slumped on Thursday as pessimism replaced optimism following the Federal Reserve’s three-quarter point rate hike and the possibility it could drag the economy into recession.

Shortly after opening, the


Dow Jones Industrial Average

fell 770 points, or 2.5%, while


S&P500

fell 2.8%, and the


Nasdaq Compound

decreased by 3%. All three major indexes gained at least 1% on Wednesday. The 10-year Treasury yield rose 0.135 percentage points to 3.42% as bond prices fell.

“The Fed will accept recession risk to deliver below trend [longer-term growth trend] economic growth,” wrote Dennis DeBusschere, founder of 22V Research.

Yesterday’s rate hike was not unexpected, nor was its magnitude. Inflation did not come down, Treasury yields soared and the stock market plunged, with the S&P 500 in a bear market, defined as a 20% decline. So when the Fed raised rates in line with expectations, the market rallied.

But this latest rate hike is not the end of the story, and markets are now taking notice. The Fed’s Expected Future Rate Hikes raise the benchmark lending rate to 3.75% by the end of 2023. That took the 2-year Treasury yield, which tries to forecast where the benchmark lending rate is a few years from now, to 3.28%, up from Wednesday’s close. and just below a multi-year high.

The fact is that the Fed continues to need to plan more rate hikes in order to reduce economic demand and inflation, and the markets need to take this into account. The ultimate fear is that the Fed will push the economy into recession. Certainly, Fed Chairman Jerome Powell has said that the Fed hopes to become data dependent soon. This means that the central bank will closely monitor how quickly economic growth and inflation decline and how much tightening is needed.

But that’s a story for another day, as far as the markets are concerned. “Powell’s positive spin is gone,” wrote Andrew Brenner of NatAlliance Securities.

In the end, “they [Fed] are so behind the curve that they have little choice but to act aggressively to raise interest rates, wrote Jason Brady, president and CEO of Thornburg Investment Management.

Overseas, the Bank of England raised interest rates for the fifth consecutive time, by 25 basis points to 1.25% on Thursday, and the Swiss National Bank surprised with a rate hike of 50 basis points. base, its first increase in 15 years. The Europe Stoxx 600 is down 2.2%.

Here are some moving actions on Thursday:

Twitter

(ticker: TWTR) shares rose 0.5% and Elon Musk is expected to confirm his desire to follow through on his $44 billion acquisition of the social media company on Thursday at a general employee meeting.

You’re here

(TSLA) fell 4.5%. The electric vehicle company, of which Musk is chief executive, has raised car prices. Additionally, analysts at Jefferies have cut EV maker sales estimates for this year and next.

Boeing

(BA) fell 0.6% despite upgrading to Buy at Citi.

Amazon.co.uk

(AMZN) fell 3.5%. He announced that Prime Day would take place on July 12 and 13.

Sally Beauty Holdings

(SBH) fell 13% after being downgraded to underweight relative to equal weight at Morgan Stanley.

General dollar

(DG) fell 0.8% even after being upgraded to overweight by Equal Weight at Morgan Stanley.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com and Joe Woelfel at joseph.woelfel@barrons.com

Edward N. Arrington