KEY POINTS
  • Stocks and bonds sold off around the world Friday, as the Federal Reserve and other central banks move to raise interest rates and battle inflation.
  • Markets have been adjusting to the idea of higher interest rates at the same time recession warnings are rising.
  • "By basically endorsing the idea of a recession, [Fed Chairman Jerome] Powell set off the emotional phase of the bear market," said one strategist.

Stocks fell sharply, bond yields rose and the dollar strengthened Friday as investors heeded the Federal Reserve's signal that its battle with inflation could result in much higher interest rates and a recession.

The sell-off Friday was global, in a week where the Fed boosted rates by another three-quarters of a point and other central banks raised their own interest rates to combat global inflation trends.