Stocks drop, yields rise on worries about faster rate hikes
Stocks are falling on Wall Street Tuesday after the head of the Federal Reserve warned it could pick up the pace of its hikes to interest rates if pressure on inflation stays hotter than expected, according to an Associated Press report.
The S&P 500 was 0.8% lower in morning trading. The Dow Jones Industrial Average fell 188 points, or 0.6%, to 33,242, as of 10:09 a.m. Eastern time, while the Nasdaq composite was 0.9% lower.
Inflation and what the Fed is doing about it have been at the center of Wall Street’s wild actions this year. After seeming to be on a steady decline since peaking last summer, reports on inflation last month came in surprisingly hot. So did a suite of other data on the economy, including the job market and spending by U.S. consumers.
That raised fears on Wall Street that inflation is remaining stickier than feared and that the Fed will have to raise interest rates higher than earlier thought. Higher rates can drag down inflation because they slow the economy, but they hurt prices for stocks and other investments. They also raise the risk of a recession later on.