Stocks fell on Friday, building on their year-end selloff, as fears grow of an ongoing recession as the Federal Reserve continues to hike rates.
The Dow Jones Industrial Average fell 281.76 points, or 0.85%, to 32,920.46. The S&P 500 fell 1.11% to 3,852.36. Meanwhile, the tech-heavy Nasdaq Composite fell 0.97% to 10,705.41.
The indices recorded a second consecutive week of losses. The S&P 500 fell 2.08% for the week and put its December losses at 5.58% as hopes of a year-end rally crumble. The Dow Jones and the Nasdaq fell 1.7% and 2.7% respectively.
Trading was particularly volatile on Friday with a large number of options expiring. There were $2.6 trillion worth of index options expiring, the highest amount “relative to the size of the stock market in nearly two years,” according to Goldman Sachs. At the session low, the Dow lost as much as 547.63 points, before paring some of those losses.
The sell-off was widespread, with three shares down for every advance on the New York Stock Exchange. At one point, there were only 10 S&P 500 names in positive territory. The real estate and consumer discretionary sectors were the biggest laggards, down nearly 3% and 1.7%, respectively.
Stocks have fallen this week following the Fed’s 50 basis point interest rate hike on Wednesday – the highest rate in 15 years. The central bank said it would continue raising rates through 2023 to 5.1%, a higher than expected figure.
Following the policy update, the Dow Jones fell 142 points on Wednesday, plunged 764 points on Thursday and fell further on Friday.
“At the start of the week, we were hopeful, given the very weak CPI reading, that we could expect the Fed, and perhaps other central banks around the world, to be less hawkish.” said Bokeh Capital founder Kim Forrest.
“But because they didn’t, and they told investors and consumers harshly that they were really focused on getting inflation down quickly, it took away a lot of our hope. a soft landing,” Forrest added.