Markets, Media Stocks End Session Strongly Down Amid Recession Fears – Update

Shares plunged sharply on Thursday after the US Federal Reserve raised interest rates and Fed Chairman Jerome Powell raised fears of a recession.

The Dow Jones fell more than 700 points and closed below 30,000 for the first time since January 2021. The Nasdaq sank more than 4%, dropping more than 30% day after day. The S&P 500 fell 3.25% and hit its lowest level since December 2020.

The Federal Reserve’s decisive move to raise interest rates by three-quarters pushed equities Wednesday, but the optimism quickly faded after the largest rate hike since 1994. Powell said in a news conference that the Fed Market Committee Open could do it. Announce another similar hike at the July meeting (raised the rate by half a point last month) in an effort to drive inflation up to the 40-year high.)

Entertainment stocks faded and Warner Bros. Discovery fell 8%, one of the heaviest hits since JP Morgan released the cover today with a “neutral” rating and a target price of $ 22.

Paramount and Comcast were down 5.5%, Netflix nearly 4% and Disney 1.7%. BofA analyst Jessica Reif Erlich said in a post this morning that “the recent macro volatility is starting to affect the advertising market. While companies that spend in a recession often come out stronger, the market is comfortable given. advertisers’ concerns about labor shortages, inflation and supply chain problems.

The technology is also harming Meta, the parent of Facebook, Alphabet, the parent of Google, Amazon, Apple, Snap and Spotify.

Twitter was a rare rally at the start of green trading ahead of a scheduled virtual staff meeting with Elon Musk, but then fell, dropping 1.66%. Musk appears to be making progress due to the social media platform’s $ 44 billion torture.

The question is whether the Fed can engineer a so-called “soft entry” engine in the economy if a cascade of interest rates leads to a recession.

Right now, Powell said, the central bank is targeting a fed funds rate of 3.4% by the end of this year, 3.8% by the end of next year, and a decline of 3.4. % by 2024. This is the Fed’s goal. Reduce inflation to around 2%. The 12-month change in the consumer price index in May exceeded expectations by 8.6%. Powell noted that some elements of inflation are beyond the Fed’s control, such as rising crude oil and food prices due to the Russia-Ukraine war and disruptions to China’s supply chain due to freezes. linked to the covid.

“Over the next few months, we’re looking for compelling evidence that inflation is slowing, which equates to a return to 2% inflation,” said Powell, who acknowledged that the 75-point rate hike was “extraordinarily large. “.

“There is always a risk of going too far or going too far. And it will be very difficult to judge, or maybe not. Maybe that’s really understandable. But we are well aware of the dangers. “But I will say that the worst mistake we can make is to fail, which is not an option,” she said.