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US stocks slide for 3rd straight day after hawkish shock from Fed overpowers progress on inflation

Dec 17, 2022, 03:58 IST
Business Insider
(Photo by Scott Heins/Getty Images)
  • US stocks extended their sell-off on Friday as investors continued to fret about a hawkish Fed that appears determined to keep interest rates high through 2023.
  • Stocks initially rallied at the start of the week after the November CPI report showed progress on inflation.
  • "I think the Fed is making a terrible mistake. Their dot plot is way too tight," Jeremy Siegel said on Friday.
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US stocks fell on Friday, extending their losing streak to a third day following the Federal Reserve's 50-basis-point interest rate hike on Wednesday.

Perhaps more upsetting to investors than the expected rate hike was the Fed's 2023 year-end Fed Funds rate projection of 5.1%. That assumes three more interest rate hikes of 25 basis points in 2023, which was more than what markets were expecting heading into the Fed's FOMC meeting.

The more hawkish stance from the Fed was likely even more jarring to investors given that on Tuesday, the November CPI report showed that progress is being made in taming inflation.

According to Wharton professor Jeremy Siegel, the current dynamic could lead to a disaster for the economy in 2023. "I think the Fed is making a terrible mistake. Their dot plot is way too tight. Inflation is basically over... The talk of going higher and staying high through 2023 I think would guarantee a very steep recession," Siegel said on Friday.

Here's where US indexes stood at the 4 p.m. ET close on Friday:

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Here's what else happened today:

In commodities, bonds and crypto:

  • West Texas Intermediate crude oil fell 2.21% to $74.43 per barrel. Brent crude, oil's international benchmark, dropped 2.65% to $79.06.
  • Gold rose 0.88% to $1,803.60 per ounce.
  • The yield on the 10-year Treasury jumped three basis point to 3.48%.
  • Bitcoin fell 2.79% to $16,911, while ether dropped 4.97% to $1,206.
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