Wall Street’s downdraft continued on Thursday, as investors’ worries about inflation, sky-high interest rates and a potential recession continued to grip financial markets.
The S&P 500 fell 2 percent in early trading, on track for its sharpest drop so far in an ugly stretch for stock investors. Bonds, oil prices and shares in Europe were also sharply lower.
The backdrop remains the same: Investors are anticipating a global recession as central bankers take a hard line against inflation, looking to slow the economy by raising interest rates. Adding to the turmoil in the past week, the British government announced a new tax-cut plan that sent bond markets awry as investors worried about the inevitable jump in borrowing. It took an intervention on Wednesday by the Bank of England to calm investors down.
That sense of calm lasted only a day, however, and by Thursday morning the S&P 500 was on track to hit a new low for the year. The index has dropped in seven out of the last eight trading days and has fallen more than 6 percent in that period.
Though more settled than on Wednesday, government bond markets were also uneasy. The yield on the U.S. 10-year treasury note continued to edge higher, to about 3.802 percent, after rising above 4 percent on Wednesday for the first time since October 2008. The two-year note also rose, climbing to 4.219 percent.
The U.K.’s 10-year gilt moved up to 4.126 percent after tumbling on Thursday. The Move Index, a measure of price swings in the treasury market, was at its highest since March 2020.
The pan European Stoxx 600 index fell 2.14 percent and the London’s FTSE 100 fell 2.5 percent. The pound gained 0.63 percent on the dollar, rising to $1.0958. Tokyo’s Nikkei 225 rose 0.95 percent and Hong Kong’s Hang Seng fell 0.49 percent.
The price of West Texas Intermediate crude oil fell 1.2 percent to $81.16 dollars a barrel.