The Dow closed below the 30,000 mark for the first time since January 2021 as aggressive interest rate hikes by the Fed stoked fears of a looming recession.

The Dow Jones Industrial Average tumbled 741.46 points, or 2.4%, to 29,927.07 as investors continued to digest the Federal Reserve’s Wednesday move to hike its benchmark interest rate by 0.75 percentage points — the largest increase since 1994.

The tech-heavy Nasdaq slid 453.05 points, or 4.1%, while the S&P 500 dropped more than 100 points.

The declines came a day after stocks rallied following Fed Chairman Jerome Powell’s announcement of sharp interest rate hikes to combat inflation. While traders initially cheered the move, concerns about its implications for the economy appeared to take hold on Thursday.

“[Wednesday’s] move higher was more a function of short covering than any real buying,” Nathan Solmose, chief growth officer for tech firm SynerAI, told The Post.

“Our data simply doesn’t reflect an ability to sustain higher equity prices until the Fed relents somewhat and takes a more risk-friendly policy stance.”

Wednesday’s hike was in line with revised expectations after last week’s release of the Consumer Price Index for May. The federal data showed inflation accelerated to a higher-than-expected 8.6% last month, the sharpest rate since December 1981.

Jerome Powell
Powell on Wednesday announced the largest increase in the benchmark interest rate since 1994.

“Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures,” the FOMC said in a statement.

Craig Kirsner of Stuart Estate Planning Wealth Advisors told The Post that “higher interest rates are not good for a debt-fueled bubble like we’re in now.”

“Our economy is supported by tons of debt,” he said. “Historically speaking, rising interest rates are typically the pin that pricks debt-fueled bubbles like we’re in now, so the market is even more concerned that a recession could be coming.”

Powell reiterated that the central bank was “moving expeditiously” to address inflation and acknowledged the historic nature of Wednesday’s increase.

“Inflation has obviously surprised to the upside over the past year — and further surprises could be in store,” Powell admitted in a press conference after the Fed’s meeting on Wednesday.

The markets made gains on Wednesday after Powell's announcement.
The markets made gains on Wednesday after Powell’s announcement.
AFP via Getty Images

“We therefore will need to be nimble in responding to incoming data and the evolving outlook.”

“Clearly, today’s 75 basis point increase is an unusually large one and I do not expect moves of this size to be common,” Powell added. “From the perspective of today, either a 50-basis point or a 75-basis point increase seems most likely at our next meeting.”

Fed officials said they expect the benchmark rate to hit a range of 3.25% to 3.5% by the end of this year. That would mark the highest level since 2008.

Additional reporting by Thomas Barrabi

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