Dow drops 350 points on fears of a Fed rate hike

Dow Jones Industrial Average fell 350.76 points, or 1.03%, to close at 33,596.34, S&P 500 fell 57.58 points, or 1.44%, to close at 3,941.26 , while the Nasdaq index fell 225.05 points, or 2.00%, to close at 11,014.89.

Yesterday the Dow Jones fell nearly 500 points, as investors feared A strong labor market and service sector in the US will be a catalyst for the Fed to accelerate interest rate hikes.

The Fed’s interest rate hike will result in a stronger dollar. This will affect the profits of listed companies that receive income from abroad.

Jamie Dimon, chief executive officer of JPMorgan Chase, the largest US bank. He warned that inflation could drag the US economy into a recession next year.

“Inflation is eating away at everything. That’s about $1.5 trillion by the middle of next year. That could push the economy into a recession,” Dimon said on CNBC’s “Squawk Box.”

said Mr. Dimon Even now, consumers and businesses are in good shape. But that may not last long.

Furthermore, Mr. Dimon said The Fed’s drive to raise interest rates to as high as 5% may not be enough to stem inflation.

Investors expect the Fed to raise interest rates above 5.0% mid-next year after a solid jobs report. Even though the Fed has raised interest rates by 0.75% four consecutive times. This indicates that the Fed’s monetary policy tightening in the past has not been able to dampen the heat in the labor market. This has led to expectations that the Fed will continue to raise interest rates next year to slow the economy and stem a spike in inflation.

CME Group’s FedWatch tool indicates that investors now expect the Fed to hike interest rates to a range of 5.00 to 5.25% in May 2023. After previously forecasting a 4.75 level -5.00%