Stocks, yields veer lower as swings shake Wall Street again
Stocks are falling sharply again on Friday, and this time Treasury yields are joining in the latest swoon for Wall Street
NEW YORK — Stocks are falling sharply again on Friday, and this time Treasury yields are joining in the latest swoon for Wall Street.
The S&P 500 was 1.6% lower in afternoon trading. It took a sudden leg lower around 1:30 p.m. Eastern time, roughly tripling its loss in 20 minutes.
Treasury yields also slid at the same time, going from 2.03% to 1.98% on the benchmark 10-year note.
The price of crude oil, meanwhile, shot immediately higher. Brent crude, the international standard, was 4.2% higher at $95.21 per barrel, climbing about $2 in 20 minutes.
For stocks, it’s just the latest drop. They’ve been falling since peaking early this year amid worries that the Federal Reserve will have to get more aggressive about raising interest rates to rein in inflation.
But it’s a sharp U-turn for bonds, which have been steadily marching higher on expectations that the Fed will raise rates more often and by a sharper degree this year than expected. Just a day earlier, the yield on the 10-year Treasury topped 2% for the first time since 2019.
In other stock trading, the Dow Jones Industrial Average fell 419 points, or 1.2%, to 34,821, as of 1:58 p.m. Eastern time. The Nasdaq fell 2.2%.
Inflation has been rising persistently over the last year as the economy recovers from the virus pandemic and demand for goods far outpaces supplies. The Labor Department reported that prices at the consumer level were up 7.5% last month from a year earlier, which is the hottest inflation reading since 1982.
The broader market had been gaining ground earlier in the week, but the latest inflation report prompted a bout of selling that erased most of the week’s gains. Investors are worried about the impact from the Federal Reserve’s plan to raise interest rates to fight rising inflation. Such moves to raise interest rates could rein in inflation, but they would also put downward pressure on all kinds of investments.
Markets will likely remain volatile as the Fed moves closer to raising rates and investors gauge the impact.
“What we’re going through is likely going to continue in the short run,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
Other economies also are feeling the heat of sharp price increases, with some central banks already moving to raise interest rates. Others are holding off. Central banks in Thailand, Indonesia and India opted this week to keep their benchmark rates unchanged.
