Economic fears are roiling Wall Street, as worries grow that the Federal Reserve may have left interest rates elevated for too long, allowing them to hurt U.S. growth.
Richly valued tech stocks tumbled further on Friday, extending losses in the Nasdaq Composite to more than 10% from a record closing high reached in July. The benchmark S&P 500 index has slid 5.7% from its July peak. Now that a September rate cut has come into view following a Fed meeting this week, investors are fretting that elevated borrowing costs may already be hurting economic growth. Corporate earnings results, which saw disappointments from companies such as Amazon, Alphabet and Intel, are adding to their concerns.
Broader markets also showed signs of unease. The Cboe Volatility index – known as Wall Street’s fear gauge – hit its highest since March 2023 on Friday as demand for options protection against a stock market selloff rose.