Stocks slide to 2022 lows amid renewed recession concerns

U.S. stocks sank Thursday as investors weighed the potential economic costs of the Federal Reserve’s ongoing fight with inflation.

The S&P 500 fell by more than 3.4% before paring some losses, and the index reached its worst intraday level of the year. It also erased gains after rising 1.5% on Wednesday. The Nasdaq Composite plunged by 4%, bringing the index down as much as 32% on an intraday basis for the year-to-dat. The Dow sank by more than 800 points, or 2.6%, and the 10-year Treasury yield dropped to about 3.34%.

Stocks, which moved initially to the upside following Fed’s first 75 basis point rate hike since 1994 on Wednesday, turned around as traders assessed the potential that the central bank’s moves to bring down inflation would trigger a deeper downturn in economic activity.

The Federal Open Market Committee’s (FOMC) Summary of Economic Projections (SEP) on Thursday showed the committee itself now sees a less rosy economy ahead as its continues to hike interest rates. The FOMC now anticipates the unemployment rate will come in at 3.7% by the end of this year (versus the 3.5% rate seen in March), and that real gross domestic product will rise just 1.7% (versus the 2.8% increase seen previously). The Fed also raised its forecast for the rate of core inflation at year-end and its expectation for where the Fed funds rate would end 2022.

The lowered growth outlook coupled with a more aggressive path on interest rate hikes ahead appeared to vindicate some pundit’s…