By Yasin Ebrahim
Investing.com — The Dow Jones pared losses on Thursday but remained firmly in the red as growth sectors of the market, including consumer and technology stocks, feared the increasingly hawkish stance of the Federal Reserve does not push the economy into recession.
The slid 0.3%, or 107 points, the fell 1.4% and the fell 0.9%.
The Fed’s 0.75% on Wednesday was widely expected, but its updated forecast, pointing to further rate hikes, raises the risk of a recession.
“The higher the Fed’s target peak, the greater the risk of a recession,” Morgan Stanley said in a note. A significant slowdown in job creation, however, could persuade the Fed to “reduce pressure on the pace of policy tightening,” he added.
The bond market appears to price in the growing risk of a recession amid deeper inversions in . The curve between 2-year and 10-year Treasury yields has further inverted to levels not seen since 1982.
Market growth sectors – typically include higher value stocks and are vulnerable to a rising rate environment – such as tech and consumer stocks drove the market lower overall.
But the decline in big tech, however, appeared to attract dip buyers as megacap tech stocks moved above session lows. Apple (NASDAQ:) and Amazon.com Inc (NASDAQ:) were down, while Meta Platforms Inc (NASDAQ:), Alphabet (NASDAQ:) and Microsoft Corporation (NASDAQ:) were in the green.
In addition to rising rates, consumer stocks continued to suffer from rising geological tensions as Russia’s partial mobilization order dimmed hopes for a resolution to the conflict.
Healthcare stocks avoided selling, led by Merck & Company Inc (NYSE:), Bristol-Myers Squibb Company (NYSE:) and Eli Lilly and Company (NYSE:), the latter boosted by an upgrade in ‘UBS.
UBS upgraded Eli Lilly and Company to buy from neutral and raised its price target on the stock to $363 from $335, citing optimism about the newly approved type 2 diabetes drug. drug manufacturer. The drug not only treats type 2 diabetes, but has also been shown to treat obesity.
Energy stocks were also in the green, supported by higher oil prices on fears that the escalating war in Ukraine could weigh on supplies.
Valero Energy (NYSE:), Schlumberger (NYSE:) and Marathon Petroleum Corp (NYSE:) were among the biggest gainers in the energy sector.
In other news, Robinhood Markets (NASDAQ:) reversed gains to turn negative despite reports that the Securities and Exchange Commission will not ban order flow payouts – a crucial revenue stream for the trading platform.
Broader market weakness pushed stocks further into oversold territory, paving the way for a choppy period ahead.
“As such, we continue to anticipate a choppy trajectory for equities in the weeks ahead, noting that following declines yesterday and today, equities are mostly edging back into oversold territory.” , said Janney Montgomerry Scott.