Major stocks suffered huge losses as the market plunged on Friday, according to Reuters. CNBCSome economists believe the economy needs to experience a recession before inflation falls.
Number: of Dow Jones Industrial Average It fell to a record low this year, losing 486.27 points to 29,590.41.
- of S&P 500 down 1.72% to 3,693.23, Nasdaq Composites fell 1.8% to 10,867.93.
- The US dollar also hit a 20-year high on Friday. Reuters.
Increased federal interest rates: Federal Reserve Board on Wednesday gain Lower federal interest rates between 3% and 3.25%. When interest rates rise, stocks tend to fall.
- The rate hike was done to curb high inflation that has resulted in “pandemic-related imbalances in supply and demand, higher food and energy prices, and broader price pressures,” the Federal Reserve said. statement.
Why do stocks fall when interest rates rise? in short, forbes “As interest rates rise, stocks tend to depreciate in value for future earnings,” he said. This means that when interest rates are high, businesses are less likely to borrow, which can lead to lower earnings.
- forbes Some economists continue to say they believe higher federal rates will temporarily strain the economy but ultimately lead to a boom. On the other hand, some believe that lower interest rates will push the economy further into recession.
Future plans: Some market experts believe we need to prepare for a recession to keep inflation under control.
- according to market watchthe Federal Reserve has hinted that they intend to keep raising rates until next year and won’t stop until inflation subsides. about it.
https://www.deseret.com/2022/9/24/23370157/market-tumble-federal-reserve-stock-market-economy-dow-inflation-recession Economists expect inflation to worsen before improving