Dow Hits 2022 Low on Recession Fears   09/23 16:00

   Stocks tumbled worldwide Friday on mounting signs the global economy is 
weakening just as central banks raise the pressure even more with additional 
interest rate hikes.

   (AP) -- Stocks tumbled worldwide Friday on mounting signs the global economy 
is weakening just as central banks raise the pressure even more with additional 
interest rate hikes.

   The Dow Jones Industrial Average fell 1.6%, closing at its lowest level 
since late 2020. The S&P 500 fell 1.7%, close to its 2022 low set in mid-June, 
while the Nasdaq slid 1.8%.

   The selling capped another rough week on Wall Street, leaving the major 
indexes with their fifth weekly loss in six weeks.

   Energy prices closed sharply lower as traders worried about a possible 
recession. Treasury yields, which affect rates on mortgages and other kinds of 
loans, held at multiyear highs.

   European stocks fell just as sharply or more after preliminary data there 
suggested business activity had its worst monthly contraction since the start 
of 2021. Adding to the pressure was a new plan announced in London to cut 
taxes, which sent U.K. yields soaring because it could ultimately force its 
central bank to raise rates even more sharply.

   The Federal Reserve and other central banks around the world aggressively 
hiked interest rates this week in hopes of undercutting high inflation, with 
more big increases promised for the future. But such moves also put the brakes 
on their economies, threatening recessions as growth slows worldwide. Besides 
Friday's discouraging data on European business activity, a separate report 
suggested U.S. activity is also still shrinking, though not quite as badly as 
in earlier months.

   "Financial markets are now fully absorbing the Fed's harsh message that 
there will be no retreat from the inflation fight," Douglas Porter, chief 
economist at BMO Capital Markets, wrote in a research report.

   U.S. crude oil prices slid 5.7% to their lowest levels since early this year 
on worries that a weaker global economy will burn less fuel. Cryptocurrency 
prices also fell sharply because higher interest rates tend to hit hardest the 
investments that look the priciest or the most risky.

   Even gold fell in the worldwide rout, as bonds paying higher yields make 
investments that pay no interest look less attractive. Meanwhile the U.S. 
dollar has been moving sharply higher against other currencies. That can hurt 
profits for U.S. companies with lots of overseas business, as well as put a 
financial squeeze on much of the developing world.

   The S&P 500 fell 64.76 points to 3,693.23, its fourth straight drop. The 
Dow, which at one point was down more than 800 points, lost 486.27 points to 
close at 29,590.41. The Nasdaq fell 198.88 points to 10,867.93.

   Smaller company stocks did even worse. The Russell 2000 fell 42.72 points, 
or 2.5%, to close at 1,679.59.

   More than 85% of stocks in the S&P 500 closed in the red, with technology 
companies, retailers and banks among the biggest weights on the benchmark index.

   The Federal Reserve on Wednesday lifted its benchmark rate, which affects 
many consumer and business loans, to a range of 3% to 3.25%. It was at 
virtually zero at the start of the year. The Fed also released a forecast 
suggesting its benchmark rate could be 4.4% by the year's end, a full point 
higher than envisioned in June.

   Treasury yields have climbed to multiyear highs as interest rates rise. The 
yield on the 2-year Treasury, which tends to follow expectations for Federal 
Reserve action, rose to 4.20% from 4.12% late Thursday. It is trading at its 
highest level since 2007. The yield on the 10-year Treasury, which influences 
mortgage rates, slipped to 3.69% from 3.71%.

   Goldman Sachs strategists say a majority of their clients now see a "hard 
landing" that pulls the economy sharply lower as inevitable. The question for 
them is just on the timing, magnitude and length of a potential recession.

   Higher interest rates hurt all kinds of investments, but stocks could stay 
steady as long as corporate profits grow strongly. The problem is that many 
analysts are beginning to cut their forecasts for upcoming earnings because of 
higher rates and worries about a possible recession.

   "Increasingly, market psychology has transitioned from concerns over 
inflation to worries that, at a minimum, corporate profits will decline as 
economic growth slows demand," said Quincy Krosby, chief global strategist for 
LPL Financial.

   In the U.S., the jobs market has remained remarkably solid, and many 
analysts think the economy grew in the summer quarter after shrinking in the 
first six months of the year. But the encouraging signs also suggest the Fed 
may have to jack rates even higher to get the cooling needed to bring down 
inflation.

   Some key areas of the economy are already weakening. Mortgage rates have 
reached 14-year highs, causing sales of existing homes to drop 20% in the past 
year. But other areas that do best when rates are low are also hurting.

   In Europe, meanwhile, the already fragile economy is dealing with the 
effects of war on its eastern front following Russia's invasion of Ukraine. The 
European Central Bank is hiking its key interest rate to combat inflation even 
as the region's economy is already expected to plunge into a recession. And in 
Asia, China's economy is contending with still-strict measures meant to limit 
COVID infections that also hurt businesses.

   While Friday's economic reports were discouraging, few on Wall Street saw 
them as enough to convince the Fed and other central banks to soften their 
stance on raising rates. So they just reinforced the fear that rates will keep 
rising in the face of already slowing economies.