Stocks gave up early advances and finished broadly down on Wall Street on Thursday after Federal Reserve Chair suggested the central bank needed to be more aggressive in combating excessive inflation.
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Fed Chair Jerome Powell said the Fed must move quicker than it has in the past to combat inflation in a panel discussion hosted by the International Monetary Fund, implying that severe interest rate hikes are inevitable in the coming months.
After opening up 1.2% higher, the S&P 500 finished 1.5% lower. The Dow Jones Industrial Average was down 1%, while the Nasdaq was down 2.1%.
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The afternoon sell-off left the S&P 500 flat for the week and knocked the Nasdaq into the red. Both indexes came into this week with two consecutive weekly declines.
The benchmark S&P 500 fell 65.79 points to 4,393.66. The Dow dropped 368.03 points to 34,792.76. The Nasdaq slid 278.41 points to 13,174.65.
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Smaller company stocks fell more than the broader market. The Russell 2000 gave up 46.72 points, or 2.3%, to 1,991.46.
The broader market has had a choppy week as investors review the latest round of corporate earnings amid lingering concerns about rising inflation and the Fed’s shift away from an ultra-low interest rate policy.
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More than 80% of the stocks in the S&P 500 fell Thursday, with technology stocks accounting for a big share of the decline. Pricey valuations for many of the bigger technology companies give them more sway in directing the broader market higher or lower. Microsoft fell 1.9% and chipmaker Nvidia slid 6%.
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American Airlines gained 3.8% after telling investors it expects to turn a profit in the second quarter as more people return to travel.
Tesla rose 3.2% after the maker of electric cars and solar panels reported strong sales and a seven-fold increase in profits despite global supply chain kinks.
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Bond yields have been gaining ground as investors prepare for higher interest rates. The yield on the 10-year Treasury rose significantly to 2.92% from 2.84%, hovering near its highest level since late 2018.