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Wednesday, August 17, 2022

Markets swoon in early trading

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Stocks sold off in early trading Thursday as inflation, interest rates and bank earnings weighed on investors.

Futures linked to the Dow Jones industrial average fell more than 460 points, or 1.5 percent, just after 9 a.m. Eastern, while the broader S&P 500 index lost 1.3 percent. The tech-heavy Nasdaq shed 0.9 percent. Stocks have been getting hammered through much of 2022, with the Dow off more than 15 percent year to date.

Disappointing bank earnings contributed to Thursday’s sell off. JPMorgan Chase shares fell 3.2 percent in premarket trading after the big bank posted a 28 percent drop in second-quarter profit, citing the need to set aside more for bad loans. Morgan Stanley missed revenue and profit forecasts.

The runaway inflation that has weighed heavily on investors for months worsened in June, according to the latest consumer price index. The unexpectedly high 9.1 percent reading on Wednesday dims the likelihood the Federal Reserve will be able to bring down prices without triggering a recession.

Central bank policymakers have raised interest rates three times this year, including by a 0.75 percentage point in June, in a bid to tamp down inflation. The Fed had been widely expected to raise its key rate by a 0.75 percentage point later this month, but there’s now speculation that 100 basis points may be on the table. If so, it would be the largest one-time increase since the central bank began announcing rate hikes in the early 1990s.

This is a developing story and will be updated.

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