Dow Jones down 1,000 points as Wall Street reverses post-Fed rally

Stocks fell on Thursday amid growing concern about the impact of higher interest rates and global economic headwinds, erasing a significant rally from the previous day.

The Dow Jones Industrial Average dropped more than 1,000 points shortly after 1 p.m., down 2.9 percent. The Nasdaq Composite Index fell 4.7 percent, and the Standard & Poor’s Index fell 3.4 percent.

Thursday’s heavy selling wiped out significant gains from Wednesday, when all three major indexes rose after the Federal Reserve raised interest rates by 0.5 percentage point. The Dow closed with a gain of 938 points, the S&P closed nearly 3 percent higher, and the Nasdaq ended Wednesday with a 3.2 percent gain after Federal Reserve Chairman Jerome Powell said the bank is not seriously considering raising interest rates by more than 0.5 percentage point (50 basis points).

Wednesday’s rally was a sharp break from months of falling stock prices, driven in large part by concern about an economic slowdown caused by the Fed’s rate hike. Wall Street confidence appears to be reversing quickly on Thursday as stock prices fell and Treasury yields rose – an indicator of future interest rates – with more aggressive moves from the Federal Reserve expected.

Big tech stocks were hit the hardest on Thursday, with shares of Etsy, Ebay, Intuit, Salesforce, Microsoft and Apple taking their worst losses.

Technology stocks have fallen steadily since the start of 2022, dragging the rest of the market down after rising for most of the past two years. Technology companies often rely more on debt than companies in other industries, which makes higher interest rates an even greater threat to their profit margins.

Prices of Nike, Home Depot, Visa, Honeywell, Visa and Goldman Sachs also fell sharply on Thursday, signaling concerns about a possible slowdown in spending.