After Wednesday's strong performance, stocks fell hard again on Thursday as worries about a possible recession and rising bond yields put the squeeze back on markets. The Dow sank 458 points, or 1.5%, to 29,225; the S&P 500 fell 78 points, or 2.1%, to 3,640; and the Nasdaq fell 314 points, or 2.8%, to 10,737. A stronger-than-expected report on the US jobs market bolstered expectations for the Fed to keep raising rates and hold them at high levels for a while, potentially through 2023. Fewer workers filed for unemployment benefits last week than economists expected. That's good news for workers in general and an indication layoffs aren’t widespread despite worries about the economy. But it also keeps upward pressure on inflation, which gives the Fed more reason to keep rates high.
“The economy doesn’t look to be softening if you look at employment data,” said Brad McMillan, chief investment officer for Commonwealth Financial Network, per the AP. That undercuts any investor hopes that a weakening economy could persuade the Fed to take it easier on interest rates. The Fed's benchmark overnight interest rate has already zoomed to a range of 3% to 3.25%, up from basically zero as recently as March. That's its highest level since 2008, and the wide expectations is for the Fed to hike it by at least another full percentage point by early 2023.
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