U.S. markets continued to tumble on Friday after the Federal’s Reserve announcement to raise interest rates on Wednesday. Stocks fell for the third consecutive day this week, which has pushed the Nasdaq Composite into bear territory.
On Wednesday, Federal Reserve Chairman Jerome Powell announced that the Feds were going to raise interest rates despite its previous forecast that markets were maintaining close to neutral levels. Powell said that the Feds will hike the interests by a quarter percentage, which then sent stocks spiraling down late afternoon.
Markets continued to drag down on Friday over concerns of a government shut down. House Republicans passed a bill on Thursday to keep the government running until February and also allocated USD 5 Billion towards the U.S. Mexico border wall. However, if Congress cannot pass the bill by Friday midnight, parts of the government will shut down.
The Dow Jones Industrial Average fell by as much as 1,427.83 points or 5.9% this week. Meanwhile, the S&P 500 fell by 161.35 points or 6.2%, while the Nasdaq Composite slipped 526.91 points or 7.6%.
Tech stocks led the major decline throughout the week, as FAANG stocks tumbled. This week alone, Amazon.com Inc. (NASDAQ: AMZN) shares fell by 10.3% this week, Apple Inc (NASDAQ: AAPL) shares fell by 9.1%, Facebook Inc. (NASDAQ: FB) shares fell by 11.8%, Netflix Inc. (NASDAQ: NFLX) shares fell by 7.2% and Google’s Alphabet (NASDAQ: GOOG) fell by 4.9%.
"The message people should take home, especially if there's a government shutdown, is that longer term, the prospects for equities are not good," said Komal Sri-Kumar, President of Sri-Kumar Global Strategies. "There are lots of signs now suggesting that we may be looking at a recession. I would say that the risk here is that a whole lot of confluence is taking place: The trade was is not going to end soon, and the Fed totally misjudged the market in suggesting two more rate hikes next year."
However, despite the bearish market as well as retailers missing their quarterly financial results, Nike, Inc. (NYSE: NKE) surpassed estimates, which sent shares 8% higher on Thursday. Nike shares held on into Friday regardless of the bearish market.