Stocks plummet as good news on economy fuels interest-rate fears

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Stocks fell on Thursday, giving back their gains from the last two days, after better-than-expected data on the economy fueled worries on Wall Street that the Federal Reserve may need to boost interest rates higher.

Usually, good news on the economy would be good for markets, particularly when anxieties about a potential recession are high. But the reports showing employers laid off fewer workers than expected last week — and that the economy grew more during the third quarter than expected — suggested the Federal Reserve may indeed need to crank rates higher and hold them there for longer to kill off inflation.

Technology companies had some of the biggest losses. Chipmaker Micron Technology fell 4.1% after giving investors a weak financial forecast as it faces a drop in demand. The tech sector has also been among the hardest hit from higher interest rates, which make already high-priced tech stocks seem too expensive.Used car seller CarMax sank 8.1% after reporting results for its latest quarter that came in far below what analysts were expecting.

The yield on the 10-year Treasury, which influences mortgage rates, held steady at 3.67% from late Wednesday. The two-year Treasury yield rose to 4.23% from 4.22%.Trading had been volatile throughout the week as investors grappled with the Fed's resolve to remain aggressive in its fight against inflation, along with the risk of a potential recession in 2023.

 

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