Dow falls nearly 1,000 points on rate hike fears and poor earnings from Verizon

Apr 22, 2022, 2:41 PM | Updated: Jun 8, 2022, 3:16 pm
FILE (Photo by Spencer Platt/Getty Images)...
FILE (Photo by Spencer Platt/Getty Images)
(Photo by Spencer Platt/Getty Images)

New York (CNN Business) — The Dow Jones fell about 980 points, or 2.8%, following comments about likely aggressive interest rate hikes from Federal Reserve chairman Jerome Powell. A poor earnings outlook from Dow component Verizon didn’t help matters.

All 30 stocks in the Dow ended the day lower, led by Verizon (VZ), which fell more than 5.5%, and Caterpillar (CAT), which plunged 6.5%. Dow component American Express (AXP) was off nearly 3% in response to its latest earnings. Stocks finished near their lows of the day. The Dow was down as much as 1,019 points heading into the close.

The S&P 500 and Nasdaq each dropped more than 2.5%, too. All three indexes were in the red for the week, with the Nasdaq sliding almost 4% in the past five days. The Dow has now fallen for four straight weeks while the S&P 500 and Nasdaq have declined for the past three weeks.

Powell confirmed what many bond investors already suspected, that a half-point interest rate hike is “on the table” for the Fed’s next meeting in May.

The yield on the 10-year Treasury bond has spiked to 2.9% in recent days, the highest level since December 2018. Stock traders seem to be worried that even more aggressive rate hikes are in the cards beyond May.

Federal funds futures on the CME are indicating that the market is now pricing in a more than 90% chance of a three-quarter percentage point hike at the June meeting. That would bring rates, which were at zero just two months ago, to 1.5%. Rates haven’t been raised that sharply since November 1994.

The Fed is hoping that the rate hikes will put an end to runaway inflation. Economists and investors are concerned that surging interest rates will slow the housing market and consumer spending, and usher in a recession.

Some experts think that worries about the Fed going too far are overblown.

“Markets are very uneasy about the growing likelihood of a policy error by the Federal Reserve,” said Jamie Cox, managing partner for Harris Financial Group, in an email. “It’s madness really. Most investors would be well served to ignore the machinations of the pricing craziness and wait to see what actually happens with rates.”

The CNN Business Fear & Greed Index, which measures seven indicators of market sentiment, fell into Fear mode Friday.

“Fed worries and disappointing earnings are a lethal combination given how tenuous market sentiment is at the moment,” said Leo Grohowski, chief investment officer at BNY Mellon Wealth Management.


KSL 5 TV Live

Top Stories

National News

Authorities stand guard by a fence outside the Supreme Court following Supreme Court's decision to ...
DÁNICA COTO and CARA ANNA Associated Press

US abortion ruling sparks global debate, polarizes activists

The end of constitutional protections for abortions in the United States has pemboldened abortion opponents around the world, while advocates of abortion rights worry the Supreme Court ruling could threaten recent moves toward legalization in their countries.
1 day ago
NASA's first spacecraft designed to study a metallic asteroid won't be launching this year as plann...
Ashley Strickland, CNN

NASA’s Psyche mission to an unexplored metal world comes to a halt

NASA's first spacecraft designed to study a metallic asteroid won't be launching this year as planned, according to an announcement made by the agency on Friday.
1 day ago
Meeting of Ukrainian President Volodymyr Zelenskyy with representatives of foreign media. (Ukrainia...
Associated Press

NOT REAL NEWS: A look at what didn’t happen this week

A roundup of some of the most popular but completely untrue stories and visuals of the week. None of these are legit, even though they were shared widely on social media. The Associated Press checked them out. Here are the facts
1 day ago
FILE PHOTO (Photo by Jacob King - WPA Pool/Getty Images)...
MIKE STOBBE, AP Medical Writer

Moderna COVID-19 shots now an option for older kids in US

There is now a second COVID-19 option for kids ages 6 to 17 in the U.S.
1 day ago
Abortion-rights and Anti-Abortion rights activists fill first street in front of the U.S. Supreme C...
Cindy St. Clair

How abortion laws will change in states surrounding Utah

The Supreme Court opinion in Dobbs v. Jackson Women’s Health allows states to reshape abortion laws. Utah’s trigger law will restrict abortion in most cases. Here’s a look at what laws will look like in surrounding intermountain states.
1 day ago
A United Airlines plane lands at San Francisco International Airport on March 07, 2022 in San Franc...
DAVID KOENIG, AP Airlines Writer

Pilots in line for big raises amid global travel disruptions

The largest pilots union has approved a contract that would boost the pay of pilots at United Airlines by more than 14% over the next 18 months, potentially clearing the way for similar wage hikes throughout the industry.
1 day ago

Sponsored Articles

hand holding 3d rendering mobile connect with security camera for security solutions...
Les Olson

Wondering what security solutions are right for you? Find out more about how to protect your surroundings

Physical security helps everyone. Keep your employees, clients, and customers safe with security solutions that protect your workplace.
Many rattan pendant lights, hay hang from the ceiling.Traditional and simple lighting....
Lighting Design

The Best Ways to Style Rattan Pendant Lighting in Your Home

Rattan pendant lights create a rustic and breezy feel, and are an easy way to incorporate this hot trend into your home decor.
Earth day 2022...

How Are You Celebrating Earth Day 2022? | 4 Simple Ways to Celebrate Earth Day and Protect the Environment

Earth Day is a great time to reflect on how we can be more environmentally conscious. Here are some tips for celebrating Earth Day.
Get Money Online...

More Ways to Get Money Online Right Now in Your Spare Time

Here are 4 easy ways that you can get more money online if you have some free time and want to make a little extra on the side.
Lighting trends 2022...

Lighting Trends 2022 | 5 Beautiful Home Lighting Trends You Can Expect to See this Year and Beyond

This is where you can see the latest lighting trends for 2022 straight from the Lightovation Show at the Dallas World Trade Center.
What Can't You Throw Away in the Trash...

What Can’t You Throw Away in the Trash? | 5 Things You Shouldn’t Throw in to Your Trash Can

What can't you throw away in the trash? Believe it or not, there are actually many items that shouldn't be thrown straight into the trash.
Dow falls nearly 1,000 points on rate hike fears and poor earnings from Verizon