Dow Nears Closing in a Bear Market As Investors Fear Fed-Caused Recession: ‘Even Some Optimists Are Throwing in the Towel’

CNN financial reporter Matt Egan delivered some dire reporting on the U.S. economy Friday as the Dow Jones was “flirting with closing in a bear market” for the first time since March 2020.

CNN Newsroom anchor Ana Cabrera introduced the report by noting President Joe Biden just spoke highlighting “some of his economic wins, making some more promises should his party stay in control.”

“But his glass half full outlook does contrast with some mounting fears of a downturn, fears playing out on Wall Street right now, where you can see the markets continue to slide down 605 points right now,” she said.

Cabrera then went to Egan who was live on Wall Street.

“Well, all of this is all about high inflation and the Federal Reserve’s war on inflation. Essentially, investors are worried that the Fed is going to overdo it,” Egan began as the market ticker showed the Dow dropping below 30,000.

“Remember, these drastic interest rate hikes from the Fed are designed to slow the economy. Markets are worried the Fed is going to slow the economy right into a recession, either accidentally or on purpose, because that’s what’s required to get inflation under control,” Egan explained, adding:

Now, these recession fears are playing out on Wall Street today. The Dow is down 620 points, about 2% as we speak. Earlier today, the Dow actually hit its lowest point of the entire year and it is flirting with closing in a bear market for the first time this year. For the first time since March 2020, a bear market is a 20% decline from previous highs.

“Now even some optimists are throwing in the towel,” Egan continued, noting that Goldman Sachs cut its outlook for the U.S. stock market “because of these concerns about the Fed and about high inflation.”

Egan then read a brutal statement from Bank of America trashing the Fed’s interest rate hikes:

They said the Fed is hiking at the fastest pace in recent memory with maximum uncertainty on the macro outlook. To us, this seems like driving at 75 miles per hour, but not knowing which way the road will turn. An accident seems inevitable.

“Let’s hope not,” Egan concluded.

Watch the full clip above via CNN.