US stocks drop as investors fret about the Fed's planned interest rate hikes in 2023

Federal Reserve Chair Jerome PowellWin McNamee/Getty Images

• US stocks fell on Friday as investors continue to fret about the Fed's continued hawkish stance.

• The Fed hiked interest rates by 50 basis points on Wednesday and it expects to hike interest rates further in 2023.

• US stocks are on pace to see a 3-day decline of about 3% as investors favor bonds over stocks.

---

US stocks fell on Friday as investors continue to fret about the Federal Reserve's hawkish stance as it remains more concerned about rising inflation than a potential recession.

Fed chairman Jerome Powell hiked interest rates by 50 basis points at the FOMC meeting on Wednesday, a step-down from its prior outsized interest rate hikes of 75 basis points. But perhaps more concerning to investors is the Fed's projected 2023 outlook, which included a Fed Funds rate of 5.1%.

For the Fed Funds rate to reach the projected 5.1% level, the Fed would need to hike interest rates by 25 basis points three times in 2023. But investors have only been expecting one interest rate hike of 25 basis points next year.

That puts the Fed at odds with both investors and the bond market, which has seen yields falling rather than rising in recent months, suggesting that the Fed may be getting ahead of itself with its planned rate hikes.

Here's where US indexes stood shortly after the 9:30 a.m. ET open on Friday:

• S&P 500: 3,878.30, down 0.5%

• Dow Jones Industrial Average: 33,040.78, down 0.5% (161 points)

• Nasdaq Composite: 10,812.04, up 0.01%

Here's what else is happening this morning:

• Famed 'Big Short' investor Danny Moses says investors should avoid Tesla stock because Elon Musk's brand is deteriorating amid his ongoing management of Twitter.

• Elon Musk has now cashed in nearly $40 billion of Tesla stock since November 2021. That figure dwarfs his electric-vehicle company's profits.

• Russia is shipping millions of barrels of oil to India on Western-insured tankers, the FT reported Friday. It's the first sign Moscow may be breaking Putin's vow to shun countries that accept a G7 price cap.

• Cathie Wood's Ark Invest scooped up $11.2 million of Coinbase stock this week. As crypto turmoil weighs on the exchange, Coinbase shares are trading near all-time lows.

In commodities, bonds and crypto:

• West Texas Intermediate crude oil fell 3.04% to $73.80 per barrel. Brent crude, oil's international benchmark, dropped 3.15% to $78.65.

• Gold rose 0.30% to $1,793.10 per ounce.

• The yield on the 10-year Treasury jumped nine basis point to 3.54%.

• Bitcoin fell 2.22% to $17,009, while ether dropped 4.58% to $1,211.

Read the original article on Business Insider