North American markets faced a harsh reckoning Thursday following the U.S. Federal Reserve's outsize rate hike a day earlier, with Canada's main stock index dropping more than 600 points at closing time.

Major indexes have tumbled in 2022 amid concerns over rising inflation, climbing interest rates and economic slowdowns.

Despite a rebound Wednesday after the Federal Reserve signalled its 0.75 percentage-point interest rate hike would not become the norm, stocks fell across the board Thursday as hopes of a soft landing waned.

The S&P/TSX composite index closed down 607.50 points or 3.1 per cent to 19,004.06 — nearly 24 per cent below its spot at the start of the year.

“For me it’s all about the Federal Reserve," said Allan Small of the Allan Small Financial Group with iA Private Wealth.

Fears over the rising cost of loans and its ripple effect — starting with the housing market — are weighing on a range of indexes. Meanwhile worries around whether the U.S. central bank's rate boost — the biggest since 1994 — will quell problems caused by factors largely outside its control continue to fester, he said.

“At the end of the day, I don’t think that the Fed raising rates as aggressively as they are is doing anything for inflation — not yet," Small said. Hence even more gloom about economic stability.

“Inflation is where it’s at because of a war in Ukraine, because of a labour shortage, because of China's zero-COVID policy over the last few months."

In New York, the Dow Jones industrial average was down 741.46 points at 29,927.07. The S&P 500 index was down 123.22 points at 3,666.77, while the Nasdaq composite was down 453.06 points or 4.1 per cent at 10,646.10 — down more than 30 per cent from where it started the year.

Laden with tech stocks, Nasdaq's decline reflects the flight of investors from companies perceived as riskier or more prone to corrections, Small said.

"You're seeing tech stocks just obliterated," he said. "I don't know if there's any one tech name that's not down significantly from their highs."

The Canadian dollar traded for 77.35 cents US compared with 77.23 cents US on Wednesday.

The August crude contract was up US$2.15 cents at US$115.24 per barrel and the July natural gas contract was up 44 cents at US$7.46 per mmBTU.

Gasoline prices are showing little sign of letting up as the average price in Canada continued to top $2.10 a litre Thursday, approaching record highs, according to Natural Resources Canada.

"The summer is looking bleak on that side; I don't see any relief," Small said.

The August gold contract was up US$30.30 at US$1,849.90 an ounce and the July copper contract was down about five cents at US$4.11 a pound.

Gold, a traditional bastion of stability amid market drops and sputtering economies, notched slightly higher Thursday than it did a year earlier at $1.822 per ounce. It hit highs topping $2,050 an ounce in March.