US stocks wrapped up their worst week since 2020 as an aggressive Fed rate increase has fueled recession fears. The S&P 500 dropped 5.8% for the week and the Dow ended the week 4.8% lower. Foreign markets also declined sharply for the week with the FTSE All World Ex US falling 5.6% for the week. US crude declined to end the week at $109.56 per barrel down from $120.67 the week prior. The yield on the 10-year Treasury increased to 3.24% up from 3.16% the week prior.

The Fed approved the largest rate increase since 1994, increasing its benchmark federal funds rate by 0.75% to a range between 1.5% and 1.75%. New projections show expectations are the Fed will raise rates to at least 3% by the end of the year. Mr. Powell said he doesn’t expect moves of this size to be common but indicated a 0.5% to 0.75% increase seemed most likely at their next meeting in July. This increase raises the rate to its level from early March 2020, before the Fed slashed it to near zero due to the Covid-19 pandemic.

US consumers pulled back spending in May. Spending on retail and services fell 0.3% for the month, below the 0.1% gain expected.

Rates for a 30-year fixed-rate mortgage surged to 5.78% moving up more than 0.5% in a week. The weekly increase was the largest since 1987.

The U.K. economy shrank for the second straight month in April, as high levels of inflation reduced consumer spending and stimulus programs wound down.

The Bank of England raised its key interest rate by 0.25% from 1% to 1.25%. The increase was the fifth consecutive and the central bank indicated larger moves might be warranted to get inflation under control.