By DAMIAN J. TROISE and ALEX VEIGA – AP Business Editors
Shares closed lower on Wall Street, marking their third losing week in the past four. Banks, tech companies and industries all helped push major indices down on Friday. The S&P 500 lost 1%. The Nasdaq slipped 0.1% and the Dow Jones Industrial Average fell 1.5%. After pushing the S&P 500 to an all-time high last week, investors pulled money off the table as the Federal Reserve prepares to slow stimulus and fight inflation with increases in prices. interest rate from next year. The yield on the 10-year Treasury bill fell to 1.41%.
THIS IS A CURRENT UPDATE. AP’s previous story follows below.
Banks and big tech stocks lead another decline on Wall Street in Friday afternoon trading and every major index is on track for a weekly loss.
The S&P 500 fell 0.9% at 3:35 p.m. EST. About 67% of the benchmark’s stocks were down. The Dow Jones Industrial Average lost 462 points, or 1.3%, to 35,434. The Nasdaq slipped 0.2%.
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After pushing the S&P 500 to an all-time high last week, investors have pulled money off the table as the Federal Reserve prepares to slow stimulus and fight inflation. The S&P 500 and the Nasdaq are both heading for their third weekly decline in the last four.
Tech stocks led the losses as Wall Street braces for a hike in interest rates. Oracle slipped 6.9% for the biggest decline in the S&P 500, while Adobe fell 2.6%.
Large tech companies often have high valuations based on assumptions about their long-term profitability. These valuations are generally more acceptable to investors when interest rates remain low, but become less desirable when interest rates rise.
The Federal Reserve has announced plans to step up its reduction in monthly bond purchases, which has helped keep interest rates low. The policy change paves the way for the Fed to start raising rates next year.
“The cat is kind of out of the bag now and it looks like inflation is going to be something that is going to be more persistent into 2022,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.
Smaller company stocks outperformed the market as a whole, pushing the Russell 2000 index up 1%.
Bond yields have fallen. The 10-year Treasury yield slipped to 1.41% from 1.42% Thursday night. This has taken a toll on banks, which rely on higher yields to charge more lucrative interest on loans. JPMorgan Chase fell 2.3%.
Losses were significant in all other sectors. A wide range of retailers, housewares manufacturers and industrial companies also fell. Home Depot slipped 2.8%, Procter & Gamble slipped 1.4% and Caterpillar slipped 2%.
Sectors deemed less risky held up better than the rest of the market. Real estate values rose slightly. The losses were not so severe for the utility and materials companies.
Some travel-related stocks, including cruise line operators, rose. Royal Caribbean grew 6.2%, Norwegian Cruise Line 5.3% and Carnival 4.4%.
The price of US crude oil fell 2.1% amid a general decline in energy futures. The S&P 500’s energy stocks mostly fell. Chevron was down 1.9%.
Most of the European and Asian markets closed lower.
Wall Street is also assessing the potential impact of the surge in coronavirus cases with the new omicron variant. Public health experts in Europe have called for greater precautions amid the latest wave.
Investors also envision heightened tensions between China and the United States amid an already strained global supply chain. In the United States, Congress has approved legislation banning all imports from China’s Xinjiang region unless companies can prove they were produced without forced labor.
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