Stock futures were lower on Friday to close out another losing week as investors fear the Federal Reserve’s aggressive hiking campaign to fight inflation will lead to an economic downturn.
Dow Jones Industrial Average futures fell by 395 points, or 1.3%, while S&P 500 futures slid 1.4%. Nasdaq 100 futures lost 1.5%.
Friday is set to be the fourth negative session in a row for the major averages, with the Dow on track to take out its June closing low. The Fed on Wednesday enacted another super-sized rate hike of 75 basis points and indicated it would do another at its November meeting.
“It’s another dismal session as prices extend their declines,” wrote Vital Knowledge’s Adam Crisafulli in a note to clients Friday. “The narrative didn’t really change dramatically since Thursday – markets remain anxious about ongoing monetary tightening, higher yields, softening growth, and falling multiples.”
Bond yields have soared this week following the Fed’s actions, with the 2-year and 10-year Treasury rates hitting highs not seen in over a decade. Stocks that would suffer the most in a recession have led the losses this week with the Consumer Discretionary Select Sector SPDR Fund off by more than 5%. The Real Estate Select Sectors SPDR Fund is down by 6%.
Goldman Sachs cut its year-end S&P 500 target because of rising rates, predicting at least 4% downside from here.
Analysts and investors on Friday continue to weigh whether the Fed’s recent moves indicate a downturn ahead, with some believing and accepting that a recession is in fact on the horizon.
“At some point, they’ll figure out that recession doesn’t mean the end of the world, and they’ll start getting constructive on stocks again,” said Tim Lesko, a senior wealth advisor at Mariner Wealth Advisors. “But right now, we’re acting as if the sky’s falling.”
Major averages are on pace for their fifth decline in the last six weeks and on track close out the week with losses. The Dow has given up about 2.4% this week, while both the S&P and Nasdaq have fallen 3% and 3.3%, respectively.
Costco was down in premarket trading Friday. Although the retailer posted fiscal fourth-quarter revenue and earnings that topped analysts’ expectations, it is seeing higher freight and labor costs.
Read More: Dow futures tumble by 350 points, head for big losing week on fear the Fed is overdoing