Stocks extended losses Thursday after the Federal Reserve delivered another aggressive interest rate hike, boosting fears that the central bank's hawkish actions to stabilize prices will tip the economy into a recession. The Dow Jones Industrial Average lost over 100 points, while the S&P 500 and Nasdaq Composite closed 0.8% and 1.4% lower, respectively.
Here's how the market settled on Thursday:
S&P 500 Index
Dow Jones Industrial Average
Nasdaq Composite Index
On Wednesday, the Fed raised interest rates by 75 basis points for a third consecutive time, bringing the federal funds rates to a new range of 3.0% to 3.25% from the current range of 2.25% and 2.5%.
Central bankers also signaled that they expect to keep rates higher, projecting the federal fund rate to rise by 4.4% by the end of the year--suggesting another 0.75% rate hike is ahead--and 4.6% by the end of 2023. Those forecasts are up from 3.4% for 2022 and 3.8% for 2023 previously.
In remarks on Wednesday, Fed Chair Jerome Powell said the inflation level has not fallen as much as the central bank had expected it would by this point, suggesting that the Fed will continue to take aggressive actions to stabilize prices.
"Our expectation has been we would begin to see inflation come down, largely because of supply side healing," he said. "We haven't. We have seen some supply side healing but inflation has not really come down."
"We need to continue, and we did today do another large increase as we approach the level we think we need to get to," Powell added. "We're still discovering what that level is."
On the economic front, mortgage rates jumped to their highest level since 2008 on Thursday, with the average rate on a 30-year mortgage increasing to 6.29% from 6.02% last week, according to Freddie Mac. Now, rates are more than 3 percentage points higher than they were at the start of the year.
Elsewhere, first-time unemployment claims rose to 213,000 for the week ended September 17, according to the Labor Department on Thursday, increasing from the previous week's downwardly revised total of 208,000.
For stocks, shares of KB Home
"Although we experienced a shortfall in deliveries relative to our expectation due to extended build times and ongoing supply chain constraints, which will also impact out 2022 fourth quarter, our results demonstrate our large scale, excellent portfolio of communities and a healthy balance sheet," CEO Jeffrey Mezger said in a statement.
