Stocks stumble 2.8% as worries about interest rates worsen

Apr 21, 2022, 11:53 AM | Updated: Apr 22, 2022, 2:45 pm
FILE - The New York Stock Exchange operates during normal business hours in the Financial District,...

FILE - The New York Stock Exchange operates during normal business hours in the Financial District, Wednesday, Oct. 13, 2021, in the Manhattan borough of New York. Stocks are opening lower on Wall Street, Friday, April 22, 2022, capping a bumpy week as the Federal Reserve promises to be more aggressive about fighting inflation. (AP Photo/John Minchillo, File)

(AP Photo/John Minchillo, File)

NEW YORK (AP) — Stocks tumbled on Wall Street Friday, leaving the S&P 500 with its biggest one-day loss in almost seven weeks, as worries deepen about a surge in interest rates and the U.S. central bank’s efforts to fight inflation.

Several disappointing profit reports from companies also shook what’s been the market’s main pillar of support.

The S&P 500 sank 2.8% and marked its third losing week in a row. The Dow Jones Industrial Average slumped 2.8%, its biggest drop in 18 months, after briefly skidding more than 1,000 points. The Nasdaq also had its worst day in nearly seven weeks, closing 2.6% lower.

A day earlier, Wall Street seemed set for healthy gains for the week after American Airlines, Tesla and other big companies reported strong profits or better forecasts for future earnings than analysts expected. Such corporate optimism has helped stocks remain relatively resilient, even as worries swirl about the highest inflation in decades, the war in Ukraine and the coronavirus.

But markets buckled as the chair of the Federal Reserve indicated the central bank may indeed hike short-term interest rates by double the usual amount at upcoming meetings, starting in two weeks.

The Fed has already raised its key overnight rate once, the first such increase since 2018, as it aggressively removes the tremendous aid thrown at the economy through the pandemic. It’s also preparing other moves to put upward pressure on longer-term rates.

By making it more expensive for businesses and households to borrow, 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, all while putting downward pressure on most kinds of investments.

“After years of being very accommodative, the Fed has made it clear that policy is going to be tighter for the foreseeable future,” said Brian Price, head of investment management for Commonwealth Financial Network. “Their hawkish stance is giving investors pause as many are left to evaluate the impact on profit margins and (stock) multiples moving forward.”

The S&P 500 fell 121.88 points to 4,271.78. The Dow dropped 981.36 points to 33,811.40. The Nasdaq lost 335.36 points, closing at 12,839.29. The Dow and Nasdaq also posted losses for the week.

Smaller company stocks also fell sharply. The Russell 2000 slid 50.80 points, or 2.6%, to 1,940.66.

A preliminary report on Friday indicated the U.S. services industry’s growth is slowing, hurt in particular by surging costs for fuel, wages and other expenses.

Treasury yields have soared as investors prepare for a more aggressive Fed, and stocks have often moved in the opposite direction of them. The yield on the 10-year Treasury slipped to 2.90% from 2.91% late Thursday, but remains close to its highest level since 2018. It began the year at 1.51%.

The two-year Treasury yield, which moves more on expectations for Fed action on short-term rates, has zoomed even more. It was at 2.69% late Friday after more than tripling from 0.73% at the start of the year.

Markets around the world are feeling similar pressure on rates and inflation, particularly in Europe as the war in Ukraine pushes up oil, gas and food costs.

On Wall Street, most stocks fell, including more than 95% of the companies in the S&P 500. Technology and health care companies were among the biggest weights. Apple fell 2.8% and Microsoft dropped 2.4%.

HCA Healthcare slumped 21.8% for the biggest decline in the S&P 500 after reporting weaker earnings per share for the latest quarter than analysts expected. The hospital operator also cut its forecasted ranges for revenue and earnings this year.

Verizon Communications slid 5.6% after it said it expects earnings for the year to fall at the lower end of the range it had previously forecast. The company also reported slightly weaker revenue than expected for the first three months of the year.

Retailer Gap sank 18% after it cut its forecast for sales for the current fiscal quarter and said the CEO of its Old Navy business will leave the company.

The disappointing company earnings and outlooks, plus Powell’s remarks Thursday, have ratcheted up worries for investors already trying to navigate economic uncertainty over the lingering global supply chain issues, the pandemic and the war in Ukraine, said Greg Bassuk, CEO of AXS Investments.

“Looking ahead, that’s putting a sour taste in investors’ mouths around the likelihood of corporate earnings being stronger for the balance of 2022,” he said.

___

AP Business Writer Yuri Kageyama contributed. Veiga reported from Los Angeles.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Arby's - LEHI, UT - OCTOBER 26: Exterior view of an Arby's restaurant on October 26, 2017 in Lehi, ...
Associated Press

Ex-Arby’s manager in Vancouver, Wash. sentenced after urinating in milkshake mix

A former manager at an Arby’s restaurant admitted to possessing child pornography and urinated into a milkshake mix
19 hours ago
FILE - An Optus phone sign hangs above its store in Sydney, Australia, Thursday, Oct. 7, 2021. Aust...
Associated Press

Australia flags tough new data protection laws this year

CANBERRA, Australia (AP) — Australia could have tough new data protection laws in place this year in an urgent response to a cyberattack on a telecommunications company that stole the personal data of 9.8 million customers, the attorney-general said on Thursday. Attorney-General Mark Dreyfus said the government would make “urgent reforms” to the Privacy Act […]
19 hours ago
FILE - In this photo released by Xinhua News Agency, Japanese Prime Minister Shinzo Abe, left, shak...
Associated Press

Friend or foe? Japan-China ties complicated after 50 years

TOKYO (AP) — Friend or foe? Or both? On the streets of Tokyo and Beijing, the ties between Japan and China remain complicated and often contradictory, 50 years after the two Asian countries normalized relations as part of the process that brought Communist China into the international fold. Chinese official media and textbooks memorialize the […]
19 hours ago
FILE - Coolio performs at halftime of an NBA basketball game between the Phoenix Suns and the New O...
Associated Press

‘Gangsta’s Paradise’ rapper Coolio dies at age 59

LOS ANGELES (AP) — Coolio, the rapper who was among hip-hop’s biggest names of the 1990s with hits including “Gangsta’s Paradise” and “Fantastic Voyage,” died Wednesday at age 59, his manager said. Coolio, whose legal name was Artis Leon Ivey Jr., died at the Los Angeles home of a friend, longtime manager Jarez Posey told […]
19 hours ago
U.S. Vice President Kamala Harris, right, exits Air Force Two at Osan Air Base on her arrival, in P...
Associated Press

VP Harris to visit DMZ after North Korean missile tests

PYEONGTAEK, South Korea (AP) — U.S. Vice President Kamala Harris is capping her four-day trip to Asia with a stop at the heavily fortified Demilitarized Zone dividing the Korean Peninsula as she tries to demonstrate the U.S. commitment to the security of its Asian allies. The visit on Thursday comes on the heels of North […]
19 hours ago
Curious sightseers walk in the receding waters of Tampa Bay due to the low tide and tremendous wind...
Associated Press

Water drains from Tampa Bay from Ian’s winds, then refills

TAMPA, Fla. (AP) — Water driven back by powerful winds drained from Tampa Bay as Hurricane Ian approached Florida’s Gulf Coast on Wednesday, and some dared to venture out on the exposed bay floor. Ian eventually made landfall as a major hurricane near Fort Myers, about 100 miles (160 kilometers) to the south. A number […]
19 hours ago

Sponsored Articles

Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
Work at Zum Services...

Seattle Public Schools announces three-year contract with Zum

Seattle Public Schools just announced a three-year contract with a brand-new company to the Pacific Northwest to assist with their student transportation: Zum.
Swedish Cyberknife 900x506...

June is Men’s Health Month: Here’s Why It’s Important To Speak About Your Health

According to the Centers for Disease Control and Prevention, men in the United States, on average, die five years earlier than women.
...

Anacortes – A Must Visit Summertime Destination

While Anacortes is certainly on the way to the San Juan Islands (SJI), it is not just a destination to get to the ferry… Anacortes is a destination in and of itself!
...

Ready for your 2022 Alaskan Adventure with Celebrity Cruises?

Celebrity Cruises SPONSORED — A round-trip Alaska cruise from Seattle is an amazing treat for you and a loved one. Not only are you able to see and explore some of the most incredible and visually appealing natural sights on the planet, but you’re also able to relax and re-energize while aboard a luxury cruise […]
Stocks stumble 2.8% as worries about interest rates worsen