Fears of a recession following the central bank’s prolonged interest rate hikes have weighed heavily on equities this year.
Wall Street’s main indexes dropped on Thursday after fresh data underscored strength in the economy and aggravated concerns over the Federal Reserve’s continued policy tightening.
Losses in rate-sensitive megacap growth stocks such as Apple, Microsoft and Amazon pulled technology and consumer discretionary shares lower. of third-quarter US GDP revealed gross domestic product increased at a 3.2% annualized rate, above the previous estimate of 2.9%. “The GDP data beat a lot of expectations. There are concerns that the economy is not giving up too easily and it’s putting up a fight that will likely require the Fed to remain hawkish and keep interest rates higher for longer,” Sam Stovall, chief investment strategist at CFRA Research in New York, said.
The Fed and Chairman Jerome Powell struck a hawkish tone last week at its policy meeting by saying that it expectsThe bets for a 25-basis point hike to 4.5%-4.75% in February by the Fed remained largely unchanged at around 70% following the data on Thursday, although expectations for the terminal rate inched up to 4.89% by May 2023.
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