Stock futures traded lower on Friday to end another week of losses as investors fretted that the Federal Reserve’s aggressive rate hikes to fight inflation would lead to an economic downturn.
Dow Jones Industrial Average futures fell 395 points, or 1.3%, while S&P 500 futures lost 1.4%. Nasdaq 100 futures fell 1.5%.
Friday will be the fourth straight losing session for the major indexes, with the Dow on track to break past June’s closing low. The U.S. Federal Reserve raised interest rates by a massive 75 basis points again on Wednesday and said it would raise rates again at its November meeting.
Bond yields surged this week after the Fed’s actions, with rates on 2-year and 10-year U.S. Treasuries hitting highs not seen in more than a decade. The worst-hit stocks in the recession led losses this week, with the Consumer Discretionary Select Sector SPDR Fund down more than 5%. The Real Estate Select Sector SPDR Fund fell 6%.
Goldman Sachs cut its year-end target for the S&P 500 due to rising interest rates, expecting a downside of at least 4%.
On Friday, investors continued to assess whether the Fed’s recent moves portend a downturn ahead, with many believing or beginning to accept that a recession is in fact imminent.
“Based on our discussions with clients, most equity investors believe a hard landing is inevitable, and their focus is on the timing, size and duration of a potential recession, as well as investment strategies for that prospect,” Goldman wrote. David Kostin in a note to clients.
The major indexes posted their fifth straight decline in the past six weeks and were on track to close in the red. The Dow is down about 2.4% for the week, while the S&P and Nasdaq are down 3% and 3.3%, respectively.
Costco fell in premarket trading on Friday. While the retailer reported fiscal fourth-quarter revenue and earnings that beat analysts’ expectations, freight and labor costs are rising.
In other news, the pound hit a more than three-year low against the dollar after a new U.K. economic plan that included a slew of tax cuts rattled markets.