The Dow dropped 292.30 points to 33,706.74, while the Nasdaq slid 260.13 points to 12,705.22. The Russell 2000 gave up 43.38 points to 1,957.35.
Technology stocks had some of the biggest losses and the sector’s dip weighed heavily on the broader market. Microsoft fell 1.4 percent.
Retailers, banks and communications companies also fell sharply amid the broad slide.
Meme stock Bed Bath & Beyond sank 40.5 percent after the high-profile activist investor Ryan Cohen confirmed that he’s sold his stake in the company.
Cryptocurrencies fell broadly as Bitcoin slumped 8.5 percent to $21,370, according to CoinDesk.
Bright spots included General Motors, which rose 2.5 percent after reinstating its dividend. Foot Locker soared 20 percent after replacing its CEO and reporting earnings that beat Wall Street’s estimates.
Bond yields gained ground, reflecting expectations of further interest rate hikes. The yield on the 10-year Treasury rose to 2.97 percent from 2.89 percent late Thursday.
Traders had no shortage of company and economic data to review this week, including the latest batch of earnings from retailers and updates on spending, home sales and the employment market.
Big retailers including Walmart and Target have warned investors that inflation is crimping consumer spending. Department store owner Macy’s will report its results next week.
A report on retail sales this week showed that spending remains resilient as gasoline prices fall and help ease some pressure from inflation.
Wall Street is trying to determine how stubbornly hot inflation is affecting businesses and consumers and whether the economy can remain resilient and avoid a recession.
The data from government and corporate reports is also being closely watched as investors try to determine how the Federal Reserve will continue with its plan to fight inflation by raising interest rates. The goal is to raise rates and slow down economic growth to cool inflation. But, the central bank is threading a fine line between taming inflation in an already slowing economy and hitting the brakes too hard and veering the economy into a recession.
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Minutes of the Fed’s July meeting released this week said inflation is still too high and made clear the central bank will keep raising interest rates. The central bank has raised interest rates twice this year by 0.75 percentage points, triple its usual margin. Forecasters currently expect a hike of a half-percentage point at the board’s next meeting.
Wall Street will be keenly watching next week’s speech by Federal Reserve Chair Jerome Powell at an annual conference in Jackson Hole, Wyoming.
“The question is does he engage the market with his assessment of the direction of inflation, the progress the Fed is making and offer any suggestion of the direction of rate hikes?” Krosby said.
AP
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