Wall Street closes sharply lower, S&P 500 falls 3.2%

NEW YORK (AFP) – US equities dropped sharply on Thursday (June 16), a day after the Federal Reserve made an aggressive move to bring down inflation and instill confidence in the markets and other central banks followed.

The Dow Jones Industrial Average lost 741.5 points, ending down 2.4 per cent at 29,927.07 – its first close below 30,000 since January 2021.

The broad-based S&P 500, which entered a “bear market” earlier this week following the latest red-hot US inflation data, fell 3.3 per cent to 3,666.78 at the closing bell.

Meanwhile, the tech-rich Nasdaq Composite Index fell 4.1 per cent to 10,646.10.

The Fed on Wednesday announced a super-sized, three-quarter point interest rate hike – the first such increase since November 1994 – after economic data in recent days showed inflation strengthening and consumer confidence weakening.

Fed chairman Jerome Powell stressed that it is “essential” to lower inflation from the highest level in more than 40 years, and said the central bank could raise the benchmark lending rate by another 0.75 percentage points in July.

He emphasised that the Fed was not trying to induce a recession, but that aggressive measures were needed to counter rising prices.

Markets had initially welcomed the move, but stocks were in the red from the start Thursday as concerns about recession mount.

“Wall Street was quick to fade yesterday’s post-FOMC rally as the other major central banks are turning very hawkish with their respective inflation battles,” OANDA’s Edward Moya said.