Strong Economic Report Gives Way To Fed Fear
The stock market opened down Thursday morning and dropped like the frigid temperatures across the U.S.
Heavy selling crushed equities, sending the broader market tumbling toward 2022 lows as the bear market shows no signs of hibernation any time soon.
It’s another case of good news equals bad news for the stock market.
Strong economic news gives way to Fed fear
Recent jobless claims came in lower than expected and the latest third-quarter gross domestic product (GDP) estimate was revised higher.
This included less than expected jobless claims at 216,000 compared to the 225,000 forecasted (and less than 211,00 the previous week). Economic numbers were revised higher with an updated third-quarter GDP estimate now at 3.2%.
One more economic news event is ahead with November personal consumption expenditures data set for release on Friday.
On Wednesday, the stock market rallied across the board to break up a series of negative sessions over the last week. With such good economic news, why do stock market participants act like a swarm of Grinches and shift gears into fast selling so quickly?
In the market today, the Dow closed at 33,027.49 points to drop 1.05% (losing 348.99 points on the day). The Nasdaq fell to 10,476.12 points for a 2.18% tumble while the S&P 500 crumbled 1.45% to 3,822.39 points.
At one point the Dow was down almost 750 points and the Nasdaq and S&P 500 were down 3.43% and 2.74%, respectively before recovering some of the early losses before the close.
Maybe the downshift today was influenced by the central bank Grinch lounging in consumers’ living rooms, sucking up all the loose change from the couch down to the very last penny.
The Federal Reserve (Fed) remains hawkish in plans to raise federal funds interest rates through 2023 in efforts to curb continually elevated inflation.
Traders reacted to the strong economic news today with a renewed level of fear that a strong economy will prompt the Fed to continue with plans to weaken the economy and bring down inflation.
Hopefully the Fed will unwrap more than a lump of coal on Christmas day.
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