US Stocks Plunge as Interest Rate Fears Grip Markets

WASHINGTON (Sputnik) – A week of investor panic ended with the Dow Jones Industrial Average closing down 665 points on Friday, the biggest point decline since the 2008 financial crisis, the New York Stock Exchanges reported.

Friday's plunge knocked the Dow to 25,520.96, a more than 2.5 percent loss from the previous session. Both the Dow and Standard & Poor’s index of 500 stocks suffered their biggest weekly drops since early 2016, roughly 4% each.

Analysts cited fears of impending interest rate increases by the US Federal Reserve Board to calm an overheated economy, as well as the threat of inflation, with US economic growth at its highest level since prior to the Great Recession of 2008.

The sharp sell-off followed weeks in which major stock indexes set new records, almost on a daily basis.

Meanwhile, the US benchmark interest rate will likely remain in the range of 1.25 to 1.5 percent, the Federal Open Market Committee (FOMC) said in a statement on Wednesday.

"In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1-1/4 to 1‑1/2 percent," the FOMC said.

The Fed also indicated earlier that it would continue its policy of gradually tightening monetary policy in 2018.