At the close of trade, the Dow Jones Industrial Average index declined 348.99 points, or 1.05%, to 33,027.49. The S&P500 index tanked by 56.05 points, or 1.45%, to 3,822.39. The tech-heavy Nasdaq Composite Index declined by 233.25 points, or 2.18%, to 10,476.12.
All 10 sectors ended lower along with the S&P500 Index. Consumer discretionary was the worst performing sector, falling 2.6%, followed by information technology (down 2.54%), energy (down 2.31%), and industrials (down 1.25%) sectors.
Applications for jobless claims for the week ending Dec. 17 inched up by 2,000 to 216,000 from the previous week's 214,000, the Labor Department reported Thursday. The four-week moving average of claims, which smooths out some of the week-to-week swings, fell by 6,250 to 221,750.
Meanwhile, revised data from the Commerce Department showed that the US economy expanded 3.2 per cent in the third quarter ended September 2022, markedly higher than the 2.9% estimate from a month ago. The report said the stronger-than-expected reading was due to increases in exports and consumer spending that were partly offset by a decrease in spending on new housing.
The Fed has hiked its benchmark lending rate multiple times this year to rein in surging inflation. Although it moderated its pace of rate increases this month, Fed Chair Jerome Powell has signaled that the central bank's battle is not yet over, fueling market jitters.
The Fed has raised its key lending rate seven times this year has projected more in 2023 as it tries to bring down prices that are gobbling up Americans' paychecks. Last week, the Fed raised its short-term lending rate by 0.5 percentage points, a smaller increase than the previous four increases of 0.75 percentage points. Its key rate now stands in a range of 4.25% to 4.5%, the highest in 15 years. Fed policymakers forecast that their key short-term rate will reach a range of 5% to 5.25% by the end of 2023, suggesting the Fed is prepared to raise its rate by another three-quarters of a point and leave it there through next year. Fed officials have said that to put a significant dent in four-decade high inflation, the unemployment rate needs to be at least 4%. Currently, the unemployment rate stands at 3.7%, just above a half-century low. In its updated forecasts, the Fed's policymakers predicted slower growth and higher unemployment for next year and 2024. The unemployment rate is projected to jump to 4.6% by the end of 2023.
Among Indian ADR, Wipro fell 2.4% to $4.57, Dr Reddy's labs sank 0.9% to $53.20, INFOSYS was down 1.6% at $17.93. WNS Holdings dropped 0.7% to $78.97, and Azure Power Global dropped 4.9% to $4.69. HDFC Bank fell 1.8% to $68.06, ICICI Bank fell 1.2% to $21.70, and Tata Motors sank 4.8% at $22.86.
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