Dow futures drop 350 points, heading for a big loss week on fear the Fed is overdoing it

Stock futures fell on Friday to close out another week of losses as investors feared that the Federal Reserve’s aggressive hike campaign to fight inflation could lead to an economic slowdown.

Dow Jones Industrial Average futures fell 395 points, or 1.3%, while S&P 500 futures were down 1.4%. Nasdaq 100 futures lost 1.5%.

Friday is set to be the fourth consecutive negative session for the major averages, with the Dow on track to take out the bottom of the June closing. The Federal Reserve decided on Wednesday to raise the benchmark interest rate by 75 basis points and indicated it would do so again at its November meeting.

Bond yields soared this week after the Fed’s actions, with two- and 10-year Treasuries hitting levels not seen in over a decade. Stocks that have suffered the most in the recession led losses this week with the SPDR consumer discretionary fund dropping more than 5%. The SPDR fund for Real Estate Select Sectors is down 6%.

Goldman Sachs S&P 500 target cut for year-end Because rates are rising, with a drop of at least 4% expected from here.

Analysts and investors on Friday continued to assess whether the Fed’s recent moves point to a future deflation, as many believe or are beginning to accept that a recession is in fact on the horizon.

“At some point, they’ll find out that a recession doesn’t mean the end of the world, and they’ll start dealing constructively with stocks again,” said Tim Lesko, senior wealth advisor at Mariner Wealth Advisors. “But now, we are acting as if the sky is falling.”

The major averages are on the pace of their fifth decline in the past six weeks and are on track to close the week with losses. The Dow has shed about 2.4% this week, while the S&P and Nasdaq are down 3% and 3.3%, respectively.

Costco slipped in pre-market trading on Friday. Although the retailer reported fiscal fourth-quarter revenue and profits that beat analysts’ expectations, it’s seeing a rise in shipping and labor costs.