U.S. stocks opened lower Thursday while oil and energy stocks gained after the European Central Bank raised interest rates from zero to .75% point in an effort to stifle inflation — and the Federal Reserve considered a similar increase.
In early trading, the Dow Jones Industrial Average dropped 216.19 points, or .68%. The S&P 500 shed 29.79 points, or 0.75%, and the Nasdaq Composite declined 102.92 points, or .87%.
The early downturn erased Wednesday’s gains after three weeks of losses.
Answering questions Thursday morning at the Cato Institute, Federal Reserve Chairman Jerome Powell reiterated that the central bank intended to do all it could to fight inflation. The Fed is expected to raise interest rates for a fifth time later this month.
“Recession risk is rising and we have been moving more defensive in our portfolios as a result,” Lauren Goodwin, economist and portfolio strategist at New York Life Investments, said in a note to clients. “However, high inflation means that traditional ‘risk off’ strategies such as cash and government bonds can create a drag on total return.”