NEW YORK โ Wall Street racked up more losses on Friday to close out its worst week in a month.
The S&P 500 fell 1.3% for the fourth consecutive decline. The Dow Jones Industrial Average sank 286 points, or 0.9%, and the Nasdaq composite fell 1.5%.
The stock market has been struggling under the weight of the bond market, where the 10-year Treasury yield briefly topped 5% Thursday night for the first time since 2007, according to Tradeweb.
High yields make borrowing more expensive for everyone and slow the economy, while dragging down the prices of stocks and other investments.
The yield on the 10-year Treasury bond hovered around 5% early Friday morning, before later retreating to 4.91%. Overall, it has been moving closer to the Federal Reserve's main interest rate, which is already above 5.25% and at its highest level since 2001.
Yields swung a day earlier after investors embraced the Federal Reserve chair's comments. Jerome Powell to indicate that the central bank will not increase its main interest rate at its next meeting on November 1. But financial markets are less sure what the Federal Reserve will do after that, and the central bank has said its next actions will depend entirely on how inflation and the labor market perform.
The Federal Reserve has raised its overnight interest rate at a dizzying pace in hopes of quelling high inflation, which has dropped from its peak last summer. But a rise in oil prices threatens to add more bullish pressure. Crude oil prices remained volatile amid concerns about a war in the Middle East.
The benchmark US oil barrel fell 62 cents to settle at $88.75. It's been bouncing since The last war between Hamas and Israel. began, after jumping from $70 to over $93 over the summer.
Brent crude, the international standard, fell 22 cents to $92.16 a barrel.
The price of gold rose as investors focused on investments considered safer ahead of a weekend of uncertainty over war. It rose $13.90 to settle at $1,994.40 an ounce. Last week, it was up more than 3% heading into the weekend.
Investors are withdrawing so many dollars from riskier investments, such as junk bonds and global stock funds, and holding onto so much cash to protect themselves, that a reading of market sentiment from Bank of America indicates it is โextremely bearish.โ
Historically, such a reading has been a signal for contrarians to buy, and stock prices typically improve in the following three months, strategist Michael Hartnett wrote in a BofA Global Research report.
But he also noted that it has not been a reliable signal when very large shocks occur, such as the period around the collapse of Lehman Brothers in 2008 or the war between Russia and Ukraine early last year. Perhaps a jump in oil prices above $100 or the 10-year Treasury yield shooting above 5% could act as similarly very large shocks this time.
On Wall Street, SolarEdge fell 27.3% after the solar technology company lowered its sales and profit expectations for the current quarter. The company blamed order cancellations in Europe due in part to slower-than-expected installation rates.
Other solar energy stocks also fell, including a 14.7% drop for Enphase Energy.
Regions Financial sank 12.4% after reporting a lower-than-expected profit for the latest quarter. Attention has focused on the banking industry beyond its biggest titans. It came under severe pressure earlier this year after high interest rates helped cause three high-profile US bank collapses.
Other regional banks were also weaker. Comerica fell 8.5% despite reporting better-than-expected summer earnings. Huntington Bancshares sank 3.9% after also beating profit forecasts.
SLB, the giant oilfield services provider, fell 2.9% despite reporting higher-than-expected profits for the summer. Its revenue fell just below analysts' expectations.
On the winning side of Wall Street was Knight-Swift Transportation. The transportation company rose 11.7% after reporting stronger-than-expected fourth-quarter earnings.
In total, the S&P 500 fell 53.84 points to 4,224.16. The Dow Jones fell 286.89 to 33,127.28 and the Nasdaq fell 202.37 to 12,983.81.
In foreign stock markets, indices plummeted across Europe and Asia.
AP Business writers Zimo Zhong and Matt Ott contributed.
