NEW YORK (AP) — Stocks fell sharply in morning trading on Wall Street Thursday as bond yields marched higher and put the squeeze back on markets.
The S&P 500 fell 2.6% as of 10:15 a.m. Eastern. Nearly every stock in the benchmark index lost ground. The Dow Jones Industrial Average fell 597 points, or 2%, to 29,074 and the Nasdaq fell 3.3%.
A day before, stocks jumped and bond yields tumbled in relief after the Bank of England moved forcefully to keep borrowing rates there from spiking further. Wall Street still remains focused on the Federal Reserve and its aggressive rate hikes aimed at slowing the economy and cooling the hottest inflation in four decades.
Bond yields jumped. The yield on the 2-year Treasury, which tends to follow expectations for Federal Reserve action, fell to 4.23% from 4.14% late Wednesday. It is trading at its highest level since 2007. The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.80% from 3.73%.
A better-than-expected government report on U.S. layoffs only bolstered expectations that the Fed will keep hiking interest rates and investors are worried that it could hit the brakes on the economy too hard and cause a recession.
The U.S. economy has already contracted for two consecutive quarters, which is one informal measure of a recession. But, the employment market remains strong and consumers continue spending. That has helped bolster the economy and is making it more difficult to get inflation under control.