Stocks fell on Wall Street and put major indexes deeper into a slump as recession fears grow.
“We’re starting to have a handoff from fears about inflation and the Fed to global economic worries,” said Mark Hackett, chief of investment research at Nationwide. “We’ve reached a universal degree of pessimism.”
The goal is to make borrowing more expensive and effectively crimp spending, which would cool inflation. But, the U.S. economy is already slowing and Wall Street is worried that that the Fed’s rate hikes will pump the brakes too hard on the economy and cause a recession. The yield on the 2-year Treasury, which tends to follow expectations for Federal Reserve action, rose significantly to 4.31% from 4.21% late Friday. It is trading at its highest level since 2007. The yield on the 10-year Treasury, which influencesagainst other currencies is a concern for many countries. It dents profits for U.S. companies with overseas business, and puts a financial squeeze on much of the developing world.
Investors also have several economic reports on tap for this week that will give more details on consumer spending, the jobs market and the broader health of the U.S. economy.
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