US stock futures fell Friday morning on fears of aggressive Federal Reserve policy in stock markets pace towards a big weekly loss and government bond yields continue a dangerous climb to new highs.
Futures linked to the benchmark S&P 500 plunged 1.2% in early trading, while those on the Dow Jones Industrial Average fell more than 300 points, or 1.1%, reaching their lowest level since March 2021. Technology stocks led the way down, with Nasdaq futures falling a hefty 1.3%.
Meanwhile, the 10-year US Treasury note peaked above 3.7, reaching its highest level since 2010. The US dollar index hit a new two-decade high of 112.10. And in commodity markets, crude fell with West Texas Intermediate (WTI) futures falling 2.3% to $81.57 a barrel and Brent crude 2% to $88.61 a barrel.
The Moves Come After Federal Reserve Officials for the third time in a row, interest rates increased by 75 basis points earlier this week and chairman Jerome Powell suggested in aggressive remarks that policymakers were willing to accept economic pain in exchange for restoring price stability.
Goldman Sachs has lowered its target for the end of 2022 for the S&P 500 index by about 16% to 3,600 points from 4,300.
“Interest rate expectations are now higher than we previously assumed, putting the distribution of stock market results below our previous forecasts,” Goldman’s David Kostin said in a note.
“Based on our client discussions, a majority of equity investors believe that a hard landing scenario is inevitable and their focus is on the timing, magnitude and duration of a potential recession and investment strategies for that outlook,” he wrote.
In company news, Costco (COST) was one of the movers on Friday after the wholesaler reported fiscal income and income for the fourth quarter who beat Wall Street estimates but said inflationary pressures weighed on profit margins as consumer habits shift. Shares fell by 3% pre-market trading.
Shares of FedEx (FDX) fell about 2% in expanded trading after the shipping giant announced cost-saving measures and rate increases, one week after a grim announcement of advances caused its shares to plummet by 20%.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc