The stock market suffered more heavy losses during the past week in response to another aggressive Federal Reserve interest rate hike, and the S&P 500 is approaching a retest of its 52-week low of 3,636 back in June.
On Wednesday, the Federal Open Market Committee raised its fed funds target range by 0.75% to between 3% and 3.25%. The move marks the third 0.75% rate hike for the Fed in four months as it continues to battle inflation. In its updated economic projections, the Federal Reserve raised its outlook for 2022 personal consumption index inflation to 5.4%, up from 5.2% in June.
In response to the rate hike, interest rates on 2-year and 10-year U.S. Treasury bonds reached their highest levels in more than a decade. Ten-year rates traded at 3.71% on Friday, while 2-year Treasury rates hovered around 4.19%.
On Wednesday, DoubleLine Capital CEO and so-called "bond king" Jeff Gundlach told CNBC the Federal Reserve waited too long to raise rates and is now being too aggressive with its policy tightening, putting the health of the U.S. economy at risk. Gundlach said the odds of a U.S. recession in 2023 are now "at 75%."
Ford shares dropped 19% this week after the Michigan automaker warned investors the company would incur an additional $1 billion in inflation and supply chain costs in the third quarter.
Shares of Canadian cannabis company Aurora Cannabis traded lower by 12% on Wednesday morning after the company reported a larger-than-expected $462 million net loss in the fiscal fourth quarter.
In the week ahead, investors will get more quarterly earnings reports from Rite Aid, Nike, Micron and Bed, Bath & Beyond on Thursday.
Wall Street analysts currently have the highest percentage of "buy" ratings in the S&P 500 Energy and Information Technology sectors, according to FactSet.
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In the week ahead, investors will get key economic updates on Tuesday when the Conference Board releases its September U.S. consumer confidence reading and on Wednesday when Federal Reserve Chair Jerome Powell speaks at the 2022 Community Banking Research Conference.
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Benzinga is a financial news and data company headquartered in Detroit.
This article originally appeared on Detroit Free Press: What are the odds of a U.S. recession in 2023?