US stocks tumbled along with crude oil futures, while the dollar extended its gains as concern grew over the impact of an aggressive pace of monetary tightening on the economy.
The Dow Jones Industrial Average fell 2.1% to 29,458.5, the Nasdaq Composite fell 2.1% to 10,473.6 and the S&P 500 also fell 2.1% to 3,679.2 . Energy, Materials and Industrials led the declines, with all sectors in the red after midday on Friday.
The two-year yield rose 3.7 basis points to 4.16%, the highest level since 2007, as the year-end federal funds rate estimate was revised higher to 4.4 % earlier this week, down from a previous expectation of 3.4%. The 10-year rate fell 4.3 basis points to 3.66%, giving up its earlier gains.
The U.S. dollar index also extended its gains, jumping 1.2% to 112.68, the highest level since 2002, as the Federal Reserve is likely to tighten policy more than expected.
Most equity investors have taken the view that a “hard landing” scenario is inevitable, focusing instead on the timing, depth and duration of a potential recession, Goldman Sachs said in a statement. research note on Friday as it cut its S&P 500 year-end target by 5% to 3,600.
“The expected path for interest rates is now higher than we previously assumed, tipping the stock market earnings distribution below our previous forecast,” said David Kostin, chief investment strategist. Goldman’s US shares, in the note.
In economic news, U.S. private sector activity rebounded more than expected in September as new orders resumed growth, according to data from the S&P Global Purchasing Managers Index released on Friday. Still, overall output remained in contraction territory for the third month in a row.
In company news, APA (APA) said it has engaged professional services firm GHD to independently verify emissions data from the oil and gas company’s environmental projects over the next two years. Shares plunged 12% intraday, the most of the S&P 500.
DocuSign (DOCU) said its board of directors has named Allan Thygesen as chief executive. Thygesen will join Google from Alphabet (GOOG), where he was president of Americas & Global Partners, and will succeed Mary Agnes Wilderotter, who will remain president. DocuSign shares fell 4.9%, the worst performance on the Nasdaq.
West Texas Intermediate futures plunged 6.2% to $78.20 a barrel, dragging stocks such as Chevron (CVX), which fell 6.3%, and Marathon Petroleum (MRO), which plunged more than 11%.
Gold was down 1.6% at $1,653.70 per troy ounce and silver was down 4% at $18.83 per ounce.