Stocks fall as Wall Street heads for another losing week

NEW YORK — Stocks tumble again on Friday as the recent spike in interest rates continues to weigh on Wall Street.

The S&P 500 was down 0.8% in early trading and on track to close a third consecutive week of losses. The Dow Jones Industrial Average was down 389 points, or 1.1%, at 34,403 as of 10:15 a.m. EST, and the Nasdaq composite was down 0.3%.

A day earlier, Wall Street appeared poised for healthy gains for the week after American Airlines, Tesla and other big companies reported strong earnings or better future earnings forecasts than analysts expected. . But the S&P 500 swung from a gain to a loss as the Federal Reserve chairman signaled that he could indeed raise short-term interest rates by double the usual amount in upcoming meetings, starting at two weeks.

The Fed has already raised its key overnight rate once, the first such increase since 2018, as it aggressively cuts the huge aid provided to the economy and financial markets during the pandemic. He is also preparing other measures to put upward pressure on longer-term rates. By making borrowing more expensive for businesses and households, the higher rates are meant to slow the economy, which should hopefully halt the worst inflation in generations. But they can also trigger a recession, while putting downward pressure on most types of investments.

The 10-year Treasury yield is at 2.89%, up from 2.91% on Thursday night, but still close to its highest level since 2018. It started the year at 1.51%.

The two-year yield, which moves more in line with expectations of Fed action on short-term rates, rose further. It is at 2.74%, compared to 2.68% on Thursday evening, and has more than tripled compared to 0.73% at the start of the year.

Markets around the world are feeling similar pressure on rates and inflation, especially in Europe as the war in Ukraine drives up oil, gas and food prices.

The German DAX lost 1.9% on Friday, while the French CAC 40 fell 1.9%. The FTSE 100 in London slipped 0.9%.

Beyond developments in Ukraine, a run-off presidential election in France this weekend could also swing markets.

In Asia, Japan’s Nikkei 225 fell 1.6% and South Korea’s Kospi lost 0.9%. Shares in Shanghai rose 0.2% after authorities promised to ease virus checks on truck drivers who obstruct food supply and trade.

Despite all the concerns about inflation and interest rates, higher than expected earnings from most major US corporations continue to support Wall Street.

Kimberly-Clark, the maker whose brands include Huggies and Kleenex diapers, rose 8.8% for one of the biggest gains in the S&P 500 after reporting higher earnings and revenue for the last quarter than predicted by analysts.

SVB Financial jumped 13.5% after also reporting higher-than-expected earnings per share.

But most Wall Street stocks were falling on Friday, with health care stocks among the heaviest.

HCA Healthcare fell 14.8% after reporting weaker-than-expected earnings per share.

Retailer Gap fell 19.2% after it cut its sales forecast and said the CEO of its Old Navy business would leave the company.

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AP Business Writer Yuri Kageyama contributed.

Garland K. Long