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Wall St. sinks after weak data, hawkish Fed remarks

STORY: Wall Street's main indexes closed lower on Wednesday after weak economic data and hawkish comments from Federal Reserve officials sparked worries that the central bank will keep tightening policy, perhaps enough to cause a recession.

The Dow lost 1.8%, the S&P shed nearly 1.6% and the Nasdaq dropped about one-and-a-quarter percent.

Eric Sterner is Chief Investment Officer at Apollon Wealth Management.

“For some investors who may have been under the impression that the Fed was trying to balance two priorities as far as combatting inflation and bringing the economy down to a soft landing, I think if you really pay attention to what they’ve been saying, and especially today, is their No. 1 priority by all means is to combat inflation [FLASH], even if that means putting the economy into a recession – they seem fine with that.”

St. Louis Fed President James Bullard and Cleveland Fed President Loretta Mester on Wednesday stressed the need to raise rates beyond 5% to bring inflation to heel... higher than market expectations.

Their comments came after fresh U.S. economic data showed retail sales and producer prices declined more than expected in December, which had prompted a brief morning rally in stocks on the hope that rate hikes would slow.

In individual movers, IBM’s shares were in the red after Morgan Stanley downgraded the company's shares to "equal weight" from "overweight."

And PNC Financial Services Group’s shares tumbled after the company missed estimates for its fourth-quarter profit.