Stock prices fell around the world on Friday on signs of a weakening global economy, as central banks ratchet up the pressure with further hikes in interest rates.
The S&P 500 was down 2.5% in afternoon trading, in a dismal end to what has been a rough week. It has fallen almost to its lowest point of the year, recorded in mid-June, while Wall Street remains mired in its downtrend.
For its part, the Dow Jones Industrial Average was on track to end the day 20% below its record from the beginning of the year, joining other major indices that have crossed that threshold.
European stocks also fell on preliminary data showing business activity had its biggest monthly contraction since the start of 2021.
Adding to the pressure was a new tax cut plan announced in London, which sent UK yields soaring because it would ultimately force its central bank to raise rates even higher. interest rates.
The US Federal Reserve and other central banks around the world slashed their rates this week in hopes of tackling inflation and promised big new hikes to come, but those moves will also mean reining in their respective economies, bringing the prospect of recessions as growth slows everywhere.
In addition to Friday’s disappointing data on European business activity, a report indicated that activity in the United States is also slowing, although not as much as in previous months.
“The financial markets they are now fully assimilating the Fed’s harsh message that there will be no going back in the fight against inflation,” said Douglas Porter, chief economist at BMO Capital Markets.
Crude prices fell to their lowest levels since the beginning of the year on fears that a weakening global economy will consume less fuel.
At 1:25 p.m., the S&P 500 was down 2.53%, while the Dow Jones was down 2.35%. Meanwhile, the Nasdaq lost 2.59%.
