As investors focus on a weakening economy, stocks decline and the dollar rises

The dollar gained some ground while a measure of stocks around the world fell for the fourth day in a row as the European Central Bank raised rates on Thursday and indicated the need for further tightening a day after the U.S. Also increasing rates was the Federal Reserve.

U.S. Oil prices stabilized after falling sharply earlier in the week, while Treasury yields decreased.

In addition to investor unease over central bank messaging, another sell-off in U.S. bank shares, which are already reeling from the weekend failure of a third major regional bank, put pressure on Wall Street stock indexes.

After the ECB, the central bank for the 20 nations that share the euro, raised interest rates by 25 basis points to 3.25% and indicated that further tightening would be necessary to contain inflation, European stocks ended lower.

The Fed, in contrast to the ECB, had hinted that its protracted cycle of rate hikes might be coming to an end.

Lauren Goodwin, economist and portfolio strategist at New York Life Investments in New York, said that while the prospect of a halt in rate increases in the United States was good news for American investors, it implied that the economy is slowing.

On Thursday, the Nasdaq Composite, S&P 500, and Dow Jones Industrial Average all declined, with the Nasdaq experiencing its longest losing streak since December. While PacWest Bancorp showed signs of trouble days after First Republic collapsed, emerging market stocks increased following three straight sessions of declines.

Other industries were affected by worries about banks and stricter lending standards. Due to the banking crisis, credit is now more limited, resulting in higher rates for airlines and fewer credit options for the purchase of new aircraft. In contrast to the euro, the dollar appreciated, and the Japanese yen gained ground on the dollar.

Due to local banks and indications of an economy in decline, Treasuries fell. While spot gold had risen to its highest level in years, crude oil prices stabilized following three straight days of declines.