Stocks Plummet as Concerns Over Slowing Economy and Interest Rates Mount

Strategic Insights -

The Dow Jones industrial average dropped below 11,000 for the first time in three months as concerns about slowing economic growth and interest rates continued to pummel U.S. stocks. The Federal Reserve's decision to keep raising interest rates, despite concerns about inflation, has left investors speculating about the future of the economy. The drop in oil prices provided some relief, but worries about a slowing economy persisted. Luxury hotel chain Hilton Hotels announced plans to open as many as 10 new locations worldwide, citing demand for high-end accommodations.

Key Takeaways:

  • The Dow Jones industrial average fell 71.24 points to 10,930.90, a decline of about 6 percent from its six-year high in May.
  • The Standard & Poor's 500 lost 7.70 to 1,256.15, and the Nasdaq composite shed 10.98 to 2,151.80, the lowest close since November.
  • Chemical makers DuPont and Dow Chemical paced a decline among producers of materials that feed an expanding economy, shedding $1.05 and 51 cents, respectively.
  • Target's profit forecast helped stem the declines, with shares rising $1.27 to $48.87.
  • The president of the Federal Reserve Bank of Atlanta, Jack Guynn, expressed concern about inflation, joining three other central bankers in warning about the Fed's interest rate policy.
  • Investors are speculating that the Fed will continue to raise interest rates despite slowing economic growth, prompting some to move to the sidelines.
  • Lower crude oil prices may alleviate concerns about inflation, but weaker commodity prices remain a worry.

Statistics:

  • The Dow Jones industrial average declined 6 percent from its six-year high in May.
  • The Standard & Poor's 500 lost 7.70 points, while the Nasdaq composite shed 10.98 points.
  • DuPont shares fell by $1.05, while Dow Chemical lost 51 cents.
  • Target shares rose by $1.27 to $48.87.
  • The Federal Reserve's interest rate policy has been criticized by four central bankers in a single week.

Sources:

  • NEW YORK TIMES, "Dow Falls Below 11,000 as Concerns About Slowing Economy Mount"
  • FEDERAL RESERVE BANK OF ATLANTA, Statement by President Jack Guynn, [No date]
  • BEN BERNANKE, Remarks by Fed Chairman, Tuesday
  • MTB INVESTMENT ADVISORS, Statement by James Thorne, [No date]
  • FIFTH THIRD ASSET MANAGEMENT, Statement by John Augustine, [No date]
  • HILTON HOTELS, Press Release, [No date]