Dow plunges 1,000 points as Wall Street reverses post-Fed rally

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Stocks plunged Thursday amid deepening concern about the impact of rising interest rates and global economic headwinds, erasing a massive rally from the previous day.

The Dow Jones Industrial Average was down more than 1,000 points shortly after 1 p.m., a decline of 2.9 percent. The Nasdaq composite was down 4.7 percent and the S&P 500 index was down 3.4 percent.

Thursday’s sell-off wiped out major gains from Wednesday, when all three major indexes soared after the Federal Reserve hiked interest rates by 0.5 percentage points. The Dow closed with a gain of 938 points the S&P closed nearly 3 percent higher and the Nasdaq ended Wednesday with a 3.2 percent gain after Fed Chair Jerome Powell said the bank was not actively considering rate hikes bigger than 0.5 percentage points (50 basis points).

The Wednesday rally was a sharp break from months of falling stock prices driven largely by the concern of an economic slowdown driven by Fed rate hikes. Wall Street’s confidence appeared to reverse rapidly Thursday as stock prices fell and Treasury bond yields — a predictor of future interest rates — soared in expectation of more aggressive Fed moves. 

Stocks of major technology companies took the hardest losses Thursday, with Etsy, Ebay, Intuit, Salesforce, Microsoft and Apple taking the steepest plunges.

Tech stocks have fallen steadily since the start of 2022, dragging the rest of the market down after soaring throughout much of the past two years. Tech companies are often more reliant on debt than firms in other industries, making rising interest rates a greater threat to their profit margins.

Nike, Home Depot, Visa, Honeywell, Visa and Goldman Sachs also fell sharply Thursday, a sign of concerns about a potential slowdown in spending.