Wall Street’s main indexes were set to open higher on Friday after a heavy selloff triggered by the Federal Reserve and other major central banks raising interest rates heightened recession fears.
The benchmark S&P 500 and the tech-heavy Nasdaq have plunged 6% so far this week, with the former shedding nearly $2 trillion in this week’s selloff. Stubbornly high inflation has spooked equities in recent weeks as investors adapt to the end of the era of cheap money and worry about price pressures taking a toll on corporate profits and economic growth.
Meanwhile, Fed Chair Jerome Powell reiterated the central bank’s focus on bringing back inflation to its 2% target while speaking at a conference on the “International Roles of the U.S. Dollar”.
The S&P 500 has slumped about 23% this year and recently confirmed it was in bear market territory, or down 20% from its record closing high. The Dow is also on the cusp of confirming a bear market.
The Fed on Wednesday raised its key rate by 75 basis points and officials outlined a faster pace of rate hikes. The Bank of England and the Swiss National Bank also raised borrowing costs.