The S&P 500 opened flat on Thursday after the major averages came off a day of steep losses following another large rate hike from the Federal Reserve.
Stocks were mostly lower in early morning trading, with the Dow Jones Industrial Average last down 30 points, or 0.1%. The S&P 500 traded 0.1% lower. The Nasdaq Composite dipped 0.2%.
Stocks closed lower on Wednesday, continuing the recent sell-off trend as investors evaluated the Fed’s latest comments. The Dow slumped 522 points. Both the S&P 500 and Nasdaq Composite shedding more than 1.7% each, putting both averages at their lowest levels since June 30 and July 1, respectively. The big drop in equities came in a volatile period after the Fed’s third consecutive 0.75 percentage point rate increase.
“Yesterday’s FOMC meeting was a tough pill for markets to swallow and I think this likely continues for three reasons that came out of the Fed,” said Saira Malik, Nuveen’s chief investment officer, citing higher interest rates, inflation, and unemployment.
Policymakers on Wednesday pledged to continue raising rates as high as 4.6% in 2023 before pulling back in the fight against inflation, spurring fears on Wall Street that the economy could tip into a recession as the central bank aims to slow economic growth.
The Fed expects to raise its year-end rate to 4.4% in 2022, continuing aggressive action against rising prices through the remainder of the year.
DoubleLine Capital CEO Jeffrey Gundlach said Wednesday on CNBC’s “Closing Bell: Overtime” that the Fed needs to slow its rapid pace of tightening.
“Monetary policy has lags that are long and variable, but we’ve been tightening now for a while,” he said, noting that the impact of the tightening could lead to a recession. Shares of Robinhood jumped in the premarket amid a report that the SEC won’t ban payment for order flow.
On the economic front, the latest data on weekly jobless claims came in slightly better than expectations.