Stocks ended lower on Wall Street on growing concern that the Federal Reserve and other central banks are willing to cause a recession if that’s what it takes to control inflation.
This week, the Federal Reserve raised its forecasts for the level to which it will eventually raise interest rates and tried to allay some investors’ hopes of rate cuts next year. In Europe, the central bank was even more aggressive in the eyes of many investors.
The index S&P 500 fell 1.1%, the Dow Jones 0.8% and the Nasdaq Composite 1 percent.
Thursday, Wall Street fell sharply on recession fears after several central banks raised their reference rates in the previous hours.
The Dow Jones index lost 2.25% to 33,202.22 points, the technology-based Nasdaq a strong 3.23% to 10,810.53, and the broader S&P 500 index fell 2.49% to 3,895.83 points.
The government reported that retail sales fell 0.6% from October to November, more than expected. The pullback followed a sharp rise the previous month.
After closing Wednesday with losses after the Federal Reserve agreed to a half-point rise in interest rates, the market maintained negative sentiment on Thursday, fearing that the rise in the price of money -which the fed has said that they will continue – produce a slowdown in the economy.
Although the increase announced by the Fed on Wednesday was what investors expected, the concern comes mainly from the signs of the us central bank that it might have to push rates higher than expected in 2023.
The fears were stoked this Thursday when they met some disappointing retail spending data in November, which point to the fact that the inflation it could be starting to make a dent in consumption.
All sectors of Wall Street They listed the day in red, with the greatest losses for communications companies (-2.46%) and technology companies (-2.36%).
The US Census Bureau reported this Thursday that the fall is greater than expected by the markets and analysts, who expected a reduction in consumption of 0.1 percent. In October, retail sales had risen 1.3 percent.
November is the month in which two of the biggest consumer “festivities” are celebrated in USA“black friday” Y “cyber monday”, when companies and commercial establishments offer deep discounts on their products to encourage consumer spending.
But in November, furniture sales fell 2.6%, building construction materials 2.5% and automobile sales 2.3 percent. Sales of electronics stores fell 1.5% and those of e-commerce companies such as Amazon decreased 0.9 percent.
On the other hand, sales in food and drink stores, restaurants, bars and personal care establishments increased slightly.
The drop in US retail sales comes as both inflation and interest rates remain high and suggest that the measures taken by the Federal Reserve to reduce inflationary pressure are beginning to work.
In November, inflation in the United States fell for the fifth consecutive month to 7.1%, after standing at 9.1% in June.
(With information from AFP and EFE)