JUST IN: The Dow Jones Industrial Average lost 1,063 points, or 3.12%. The tech-heavy Nasdaq Composite fell 4.99%. Both of those losses were the worst single-day drops since 2020.
Still, the Fed remains open to the prospect of taking rates above neutral to rein in inflation, Zachary Hill, head of portfolio strategy at Horizon Investments, noted.
"Despite the tightening that we have seen in financial conditions over the last few months, it is clear that the Fed would like to see them tighten further," he said."Higher equity valuations are incompatible with that desire, so unless supply chains heal rapidly or workers flood back into the labor force, any equity rallies are likely on borrowed time as Fed messaging becomes more hawkish once again.
Stocks leveraged to economic growth also took a beating on Thursday. Caterpillar dropped 3%, and JPMorgan Chase shed 2.5%. Home Depot sank more than 5%. Carlyle Group co-founder David Rubenstein said investors need to get"back to reality" about the headwinds for markets and the economy, including the war in Ukraine and high inflation.
"We're also looking at 50-basis-point increases the next two FOMC meetings. So we are going to be tightening a bit. I don't think that is going to be tightening so much so that we're going slow down the economy. ... but we still have to recognize that we have some real economic challenges in the United States," Rubenstein said Thursday on CNBC's"Thursday's sell-off was broad, with more than 90% of S&P 500 stocks declining.
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