Stock trader Peter Tuchman looks at a clipboard on the floor of the New York Stock Exchange at the closing bell on December 30.Wall Street capped a quiet day of trading with more losses Friday as it closed the book on the worst year for the S&P 500 since 2008.
The Fed’s key lending rate stood at a range of 0% to 0.25% at the beginning of 2022 and will close the year at a range of 4.25% to 4.5% after seven increases. The U.S. central bank forecasts that will reach a range of 5% to 5.25% by the end of 2023. Its forecast doesn’t call for a rate cut before 2024.
“The Fed has been the overhang on this market, really since November of last year, so if the Fed pauses and we don’t have a major recession we think that sets us up for a rally,” he said. The Dow dropped 73.55 points, or 0.2%, to close at 33,147.25. The Nasdaq slipped 11.61 points, or 0.1%, to 10,466.48.
Energy stocks held up better than the rest of the market as U.S. crude oil prices settled 2.4% higher. The sector notched a 59% gain for the year, while the other 10 sectors in the S&P 500 finished 2022 in the red. Several big updates on the employment market are on tap for the first week of 2023. It has been a particularly strong area of the economy and has helped create a bulwark against a recession. That has made the Fed’s job more difficult, though, because strong employment and wages mean it may have to remain aggressive to keep fighting inflation. That, in turn, raises the risk of slowing the economy too much and bringing on a recession.
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