Stocks took a dive on Friday, as recession fears intensify.
The Dow Jones Industrial Average closed at 486 points, or 1.62%, lower on Friday, marking a new low since June 17. The index fell almost 20% from its high, which represents a potential brush into bear market territory. (A bear market occurs when an index or individual stock falls 20% or more below a recent high period for an enduring period of time.) At one point, the index fell more than 800 points.
The S&P 500 was down 1.72% and the Nasdaq Composite was down 1.8% as of markets close on Friday. Footwear stocks slid across the board as well, with Nike down 1.5%, Adidas down 3.91%, Caleres down 1.19%, Foot Locker down 3.2% and Genesco down 1.02%.
The Federal Reserve on Wednesday raised interest rates by 0.75%, marking its third consecutive hike of that size in an effort to curb inflation. Rates now sit in a range between 3% and 3.25% and the committee anticipates additional increases moving forward, with a goal to return inflation to 2%.
While inflation has begun to show signs of cooling, consumer prices increased 8.3% in August from a year ago, down from a 40-year high of 9.1% in June and 8.5% growth in July. Online prices in August increased 0.4% year-over-year and 2.1% on a monthly basis, according to a Monday report from Adobe.
Meanwhile, the labor market has remained robust. The U.S. economy added 315,000 jobs in August, just below estimates of 318,000. This number represented a dip from July, which saw 526,000 jobs added. The unemployment rate in August rose to 3.7%. Notable job gains were present across professional and business services, health care and retail trade. Employment in retail trade increased by 44,000 in August and by 422,000 over the last year.
In July, the U.S. economy retracted for the second quarter in a row, sparking concerns that the country is headed into a recession, the Bureau of Economic Analysis reported. However, the Federal Reserve and the Biden administration have stated that the U.S. is not in a recession yet.