Dow testing 30K; Nasdaq, S&P also lower as Wall Street worries about recession

view original post

uschools/E+ via Getty Images

Thursday’s major market averages opened lower a day after the Federal Reserve increased its policy rate by 75 basis points. The Nasdaq leads the selloff and the Dow has sunk below 30,000.

At the start of the trading session the Nasdaq Composite (COMP.IND) has found itself down by 2.5%, the S&P 500 (SP500) is lower by 2.2%, and the Dow (DJI) has declined 1.9%.

On an economic front Initial Jobless Claims data dropped by 3K to 229K compared to the forecasted 220K and 232K prior figure that was revised.

Housing Starts and Building Permits also slid more than expected. May Housing Starts declined 14.4% M/M to 1.549M vs. the expected 1.695M and 1.810M prior point. Moreover, Building Permits declined by 7% M/M to 1.695M vs. 1.780M and remained lower than the prior figure of 1.823M.

While benchmark indices have declined, longer term U.S. Treasury yields have gained. The U.S. 10 Year yield has gained 4 basis points to 3.44%, and the U.S. 30 Year yield jumped 5 basis points to 3.45%. At the same time the U.S. 2 Year yield remains flat at 3.27%.

Oil prices also fell at the start of trading with prices of crude coming down as low as $112.79 a barrel. However, oil while still down on the session rebounded to $114.15 a barrel.

What’s next for the Fed?

Citi put out a note that said: “The message is clear: the Fed plans to rapidly raise policy rates to a terminal rate close to 4%. We now expect another 75bp rate hike in July, 50bp hikes in September and November and 25bp hikes in December, January and March to bring rates to 4-4.25% (up from our previous expectation for 3.5-3.75%)”

Morgan Staley highlighted in a note: “We expect the Fed to deliver an additional 75bp hike at its July meeting before stepping the path down to a peak of 3.625% end of this year.”

Bank of America stated: “We now see the Fed hiking to 4.15% by next spring.”

Among active stocks NVIDIA Corporation (NVDA) has declined as the firm’s director sold $36M worth of common stock.