Stocks are falling on recession fears as Santa rally hopes fade By Investing.com

By Liz Moyer

Investing.com — U.S. stocks were falling as fears about a possible recession threaten to kill any Santa Claus rally. 

At 12:16 ET (17:16 GMT), the was down 461 points or 1.4%, while the fell 1.6% and the was down 1.3%. The indexes were heading toward their second straight weekly decline and the first negative December in four years. 

The gloomy holiday mood is being stoked by fears about the Federal Reserve’s aggressive actions to stop inflation in its tracks, with the help of other central banks around the world. The Bank of England and the European Central Bank joined it in saying rates would stay higher for longer.

This week, the Fed signaled it wasn’t done with raising rates and even indicated its benchmark rate would probably rise above 5% next year, which is higher than investors expected just a few weeks ago.

Now, the policy rate is expected to rise to 5.1% next year, the Fed said, a level it hasn’t reached since 2007. Gross domestic product growth is expected to slow, the Fed said, and unemployment is expected to rise.

While the Fed of its rate hiking to a half percentage point, it isn’t expected to stop raising rates next year. The market is anticipating at least two increases of at least a quarter point each next year.

data on Friday was slower than expected, reading 46.2 versus the expected 47.7. was 44.4, slower than the 46.8 expected. Data on Thursday showed slowed in November more than expected while the labor market continued to show strength as unemployment claims unexpectedly fell.

Adobe Systems Incorporated (NASDAQ:) shares were rising 3.3% after the company issued a forecast for first-quarter profit that was above expectations. Darden Restaurants (NYSE:) stock fell 4% despite expectations and raising its outlook.