UNITED STATES

Wall Street goes into reverse, erasing much of its big rally

May 5, 2022, 9:42 AM | Updated: 9:46 am
FILE - The New York Stock Exchange logo adorn trading posts, on the floor, Wednesday, March 16, 202...
FILE - The New York Stock Exchange logo adorn trading posts, on the floor, Wednesday, March 16, 2022. Stocks are opening lower on Wall Street Thursday, May 5, giving up some of the big gains they made a day earlier. Technology companies were leading the declines. (AP Photo/Richard Drew, File)
(AP Photo/Richard Drew, File)

NEW YORK (AP) — Wall Street is shifting into reverse Thursday, giving up much of the big gains it made a day earlier on relief that the Federal Reserve wouldn’t be as aggressive as some feared in raising interest rates to fight inflation.

The sharp reversal follows the Federal Reserve’s decision Wednesday to raise its benchmark interest rate by half a percentage point as it tries to tackle persistently high inflation. The central bank also reassured investors that it wasn’t considering even bigger rate hikes in the coming months.

The S&P 500 fell 2.6% as of 10:23 a.m. Eastern. The benchmark index climbed 3% on Wednesday for its best day since May 2020.

The Dow Jones Industrial Average fell 691 points, or 2%, to 33,370 and the Nasdaq fell 3.7%.

Every major index still remains on track for solid weekly gains following Wednesday’s rally.

Bond yields rose significantly. The yield on the 10-year Treasury rose to 3.03% from 2.92% late Wednesday, reaching its highest levels since late 2018.

Technology companies had some of the biggest losses and weighed down the broader market, in a reversal from the solid gains they made a day earlier. Apple fell 3.4% and Microsoft fell 3.9%.

Internet retail giant Amazon slumped 6.4% and Google’s parent company fell 4.3%.

Energy stocks held up better than the rest of the market as U.S. crude oil prices rose 1.4%. Energy markets remain volatile as the conflict in Ukraine continues and demand remains high amid tight supplies of oil. European governments are trying to replace energy supplies from Russia and are considering an embargo. OPEC and allied oil-producing countries decided Thursday to gradually increase the flows of crude they send to the world.

Higher oil and gas prices have been contributing to the uncertainties weighing on investors as they try to assess how inflation will ultimately impact businesses, consumer activity and overall economic growth.

The Fed’s aggressive shift to raise interest rates has investors worrying about whether it can pull off the delicate dance to slow the economy enough to halt high inflation but not so much as to cause a downturn. The pace and size of interest rate increases is being scrutinized.

The latest move by the Fed to raise interest rates by a half-percentage point had been widely expected. Markets steadied this week ahead of the policy update, but Wall Street was concerned the Fed might elect to raise rates by three-quarters of a percentage point in the months ahead. Fed Chair Jerome Powell eased those concerns, saying the central bank is “not actively considering” such an increase.

The central bank also announced that it will start reducing its huge $9 trillion balance sheet, which consists mainly of Treasury and mortgage bonds, starting June 1.

The Bank of England on Thursday raised its benchmark interest rate to the highest level in 13 years, its fourth rate hike since December as U.K. inflation runs at 30-year highs.

The latest corporate earnings reports are also being closely watched by investors trying to get a better picture of inflation’s impact on the economy. Cereal maker Kellogg rose 4.1% and energy company ConocoPhillips rose 1.7% after reporting encouraging financial results. Etsy stumbled 15.5% after giving a weak forecast.

Twitter rose 3.6% after Tesla CEO Elon Musk said he had secured more backing for his bid to take over the company.

 

Today’s Top Stories

United States

Freshly pressed vinyl records are produced in a stamper at the United Record Pressing facility Thur...
DAVID SHARP Associated Press

Manufacturers struggle to keep pace with vinyl record demand

The Recording Industry Association of America says record album sales grew 61% last year — and reached $1 billion for the first time since the 1980s.
2 days ago
U.S. Representative Adam Kinzinger (R-IL) speaks during the fifth of eight planned public hearings ...
Annie Grayer, CNN

January 6 committee unexpectedly adds new hearing for Tuesday

The announcement came as a surprise to many as the committee had said it was not going to resume its hearings until mid-July.
2 days ago
Bodycam footage from the Moab Police Department that shows them talking with Brian Laundrie is seen...
Jamiel Lynch and Chenelle Woody, CNN

Lawyer releases pages from Brian Laundrie’s notebook in which he admits to killing Gabby Petito

Eight pages of Brian Laundrie's notebook were released Friday by the Laundrie family attorney. The notebook was found near Brian Laundrie's remains.
5 days ago
From left, Rep. Veronica Escobar, D-Texas, Rep. Judy Chu, D-Calif., House Speaker Nancy Pelosi of C...
ALAN FRAM Associated Press

Congress sends landmark gun violence compromise to Biden

The bill that passed the House on Friday is a compromise that illustrates progress on the issue and the deep-seated divide that persists.
5 days ago
President Joe Biden speaks at the White House in Washington, Friday, June 24, 2022, after the Supre...
CHRIS MEGERIAN and ZEKE MILLER

Biden calls abortion ruling ‘a sad day’ for country

He said the court has done what it's never done before in taking away a constitutional right that is so fundamental to so many Americans.
5 days ago
June 24, 2022: LEFT: Representatives of pro-life groups from Utah celebrate at the Utah State Capit...
Simone Seikaly

Utah leaders react to Supreme Court decision to overturn Roe v. Wade

The reactions range from joy, to anger, to concern over women's access to services in the event of an unplanned pregnancy.
5 days ago

Sponsored Articles

Tax Harassment...
Jordan Wilcox

The best strategies for dealing with IRS tax harassment | You have options!

Learn how to deal with IRS tax harassment. This guide will teach you how to stop IRS phone calls and letters, and how to handle an IRS audit.
spend a day at Bear Lake...
Bear Lake Convention and Visitors Bureau

You’ll love spending the day at Bear Lake | How to spend a day at Bear Lake

Bear Lake is a place that needs to be experienced. Spend a day at Bear Lake.
Curb Appeal...
Price's Guaranteed Doors

How to have the best of both worlds for your house | Home security and curb appeal

Protect your home and improve its curb appeal with the latest security solutions like beautiful garage doors and increased security systems.
Prescription opioids can be disposed of during National Prescription Take Back Day...
Know Your Script

Prescription opioid misuse | How to protect your family from the opioid epidemic

Studies have shown that prescription opioid misuse has increased since COVID-19. So what do you need to know about these opioids?
Follow @ikeyospe...

Tax Tuesday: The Most Common Mistakes People Make When Filing Their Taxes

Fortunately, for most average earners, they will not end up owing overpayments received for the Child Tax Credit in 2021.
Follow @ikeyospe...

Tax Tuesday: How will last year’s child tax credits affect you?

Fortunately, for most average earners, they will not end up owing overpayments received for the Child Tax Credit in 2021.
Wall Street goes into reverse, erasing much of its big rally