Shares plunge to lowest level since December 2020 on rising recession fears

The Dow (INDU) closed 483 points, or 1.6%, lower on Friday. The S&P 500 (SPX) and Nasdaq (COMP) Composite fell 1.7% and 1.8%, respectively.

At one point, the Dow fell more than 800 points, more than 20% from its record of 36,799.65 on Jan. 4, entering bear territory.

The S&P 500 remains in bear territory.

“We are now in another downturn in the ongoing bear market,” said Brad McMillan, Commonwealth Financial Network chief investment officer. “This year there have been four drops and three rallies – and we’ve gone down quite a bit. That doesn’t feel right.”

This is the fourth negative day in a row for the major indices and their fifth decline in the past six weeks.

Investors don’t have many places to make money right now: In addition to falling stocks, the bond market is also selling, pushing U.S. Treasury yields to an 11-year high in recent days. The 10-year yield fell slightly on Friday, but remains close to 3.7% and the 2-year yield is above 4.1%. That’s a much better return than you can get with stocks today, so high bond yields put pressure on the stock market.

Mortgage interest rates rise to almost 6.3%, the highest level since 2008Wall Street also remains concerned that the Fed’s rate hike plan could continue to raise borrowing costs, hurting corporate earnings that support their stock prices. And if the Fed is serious about slowing the economy to contain runaway inflation, a recession could really hurt consumers who buy the products public companies make.

The market sell-off could continue for some time to come as stock valuations come under pressure from the Fed’s actions, said Ivan Feinseth, chief market strategist at Tigress Financial Intelligence. Investors “may not see a bottom until confirmation that inflation indicators have moved significantly lower, he added.

In other words, there’s a lot to worry about on Wall Street. CNN Business’s Fear and Greed Index has fallen firmly into “Fear” mode in recent days and is approaching “Extreme Fear”. Investors don’t see much to laugh about on the horizon.

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