A Stock Market Reality Check

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Well, so much for optimistic assurances about inflation, interest rates and recession. Federal Reserve Chairman Jerome Powell’s relatively sunny take on all three on Wednesday, after the latest Federal Open Market Committee meeting, had pleased investors. But they gave up all the market gains and then some on Thursday as the prospect of a rougher reality set in.

The Dow fell by more than 3%, and the S&P 500 by 3.56%, while the tech-heavy Nasdaq lost 5% in a single day. Shares could bounce back on Friday, but the sharp swing in prices over the last two days shows how uncertain investors are about the economy’s prospects as the Fed finally tightens monetary policy after years of essentially free credit.