The Dow Lost Roughly 300 Points. Why Stocks Continue To Fall

The positive energy on Wall Street is quickly dwindling: On Friday, US stocks fell once further as investors dealt with a faltering economy.

The Dow lost 282 points, or 0.9%, on the day. Both the S&P 500 and the Nasdaq Composite experienced 1.1% declines.

Although there has been a general sell-off, the consumer discretionary and real estate sectors were the hardest hit, falling more than 3% and 1.8%, respectively.

Is the Fed at fault? This week has shown how quickly sentiment on Wall Street can shift. For example, since the Federal Reserve's somber policy announcement at 2 p.m. ET on Wednesday, the Dow has dropped by nearly 1,050 points.

The Fear and Greed Index, a gauge of market emotion developed by CNN Business, finally fell into "Fear" on Friday. For weeks, the market has been in a "Greed" state.

Stocks have been rising this month as a result of news on the overall economy and the employment sector that were more positive than anticipated and weaker-than-expected inflation. Investors believed that the Federal Reserve may reduce the rate hikes it has historically made and that inflation could stabilize somewhere in 2019 without sending the country into a recession.

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That euphoria persisted until Fed Chair Jerome Powell interrupted Wall Street's celebration on Wednesday with some sobering information: According to Fed economists, the US gross domestic product, the most comprehensive indicator of the US economy, would hardly rise in the coming year.

Additionally, they forecast that by the end of 2023, the US unemployment rate will increase to 4.6%, translating to an additional 1.6 million Americans without jobs.

Worse-than-expected retail sales data on Thursday, which sent stocks tumbling, added to worries from those Fed estimates. The Dow saw its worst day in three months on Thursday, losing 765 points (2.3%). Their worst days in a month, the S&P 500 dropped 2.5%, while the Nasdaq fell 3.2%.

Moody's Analytics researchers have revised their prior forecast of 2.7% economic growth for the fourth quarter to just 1.9% annualized growth. Weak industrial and retail data alarmed Moody's analysts, who also cut their 2023 GDP forecast from 1.9% to just 0.9%, a significant decrease.

This limits the potential for anything to go wrong, according to an analysis by Moody's economist Matt Colyar.

Bringing down stocks: December has come. The volume is low, many traders are away, and minor movements can become more significant.

According to my colleague Matt Egan, the market might be in a lose-lose circumstance. Investors have been adversely affected by positive economic data since the Fed is attempting to chill the economy in order to combat inflation. But since bad economic news increases the likelihood of a recession, it is equally terrible for investors and for everyone else.

The two biggest gainers on the market today are Adobe (ADBE) and Facebook's parent firm Meta, up 3.0% and 2.8%, respectively. After the business released better-than-anticipated quarterly profits and expectations, Adobe's (ADBE) shares jumped. The stock of Meta, which is still down by close to 65% for the year, increased after JPMorgan downgraded its shares from overweight to neutral.