With Wall Street extending another week of losses and the Federal Reserve expected to further raise interest rates, the risks of a recession are becoming significant in the U.S.

The S&P 500 and the Nasdaq logged their seventh straight week of losses, their longest losing streak since the end of the dotcom bubble in 2001.

The Dow suffered its eighth consecutive weekly decline, its longest since 1932 during the Great Depression.

Worries about surging inflation and rising interest rates have pummeled the U.S. stock market this year, with danger signals from Walmart and other retailers this week adding to fears about the economy.

The S&P 500 spent most of the session in negative territory and at one point was down just over 20 percent from its January 3 record high close before ending down 18 percent from that level and flat for the day.

Closing down 20 percent from that record level would confirm the S&P 500 has been in a bear market since reaching that January high, according to a common definition.

Recession looms

Two ex-Federal Reserve officials, now freed from having to set economic policy and be accountable for it, have warned the U.S. central bank will have to raise interest rates more than expected and the outcome could well be a recession.

While U.S. inflation, running at a four-decade high, may have peaked in March, the Fed's 2-percent target is still far out of reach as disruptions to global supply chains continue to keep price rises elevated.

The inflation, measured by the Consumer Price Index, which tracks what consumers pay for goods and services, increased 8.5 percent in March compared with a year ago, the fastest rate since 1981.

Despite consumer price inflation in the U.S. slowing slightly last month, jumping by 8.3 percent compared to April 2021, annual inflation remains at its highest rate in 40 years.

According to a Reuters poll, U.S. inflation was forecast to average 7.1 percent this year, and remain above the central bank's target until 2024 at least.

Meanwhile the poll showed a median 40 percent probability of a U.S. recession over the next two years, with a one-in-four chance of that happening in the coming year.

Forecasts for the unemployment rate remained optimistic, averaging 3.5 percent this year and next, before picking up to 3.7 percent in 2024.

But more than 80 percent of respondents to an additional question – 28 of 34 – said that over the coming two years it was more likely that unemployment would be higher than they currently expected than lower.

"The only realistic way to break the wage-price spiral is to push up the unemployment rate. If the Fed does not do this by accident, they will have to do it by design," said Philip Marey, senior U.S. strategist at Rabobank.

"A recession is the inevitable outcome."

(With input from Reuters)