U.S. financial markets took big losses Thursday, with the Dow dropping 741 points at the closing bell.
The losses came one day after the Federal Reserve drastically increased interest rates to slow record-high inflation, to the extent of stoking fears of a recession.
Markets recovered slightly Wednesday after the Fed increased interest rates to the highest in three decades.
Investors are also concerned about the Fed further increasing rates, which would make borrowing even more expensive.
“Markets now expect the Fed to tighten more aggressively than previously laid out,” Ross Mayfield, investment strategy analyst at Baird Private Wealth Management, told MarketWatch, "Higher interest rates mean a cooler U.S. economy, and therefore a higher chance of recession in the next couple of years."
Two factors are mostly contributing to the nation's rise in inflation – energy and food.
The Federal Reserve is largely unable to control the price of energy, like gas, while increased food prices hurt the consumer's budget.
U.S. consumer prices have shot up by 8.6% in the past 12 months, according to a University of Michigan’s consumer sentiment report.
The tech industry has also seen a downturn as its previously surge in hiring is now met with May having 16,000 layoffs. June continues this trend of layoffs with 7,000 jobs being eliminated already.
American investor Michael Novogratz , CEO of cryptocurrency investment company Galaxy Investment Partners, explained how the housing market is rolling over, multiple industries are firing employees, and how the bubble will pop soon.
“The economy is going to collapse,” Novogratz said in an interview Wednesday. “We are going to go into a really fast recession, and you can see that in lots of ways,”