Wall Street Stocks Fall As Fed Rates May Go Higher

Stocks fell broadly on Wall Street Thursday and Treasury yields rose after more indications from the Federal Reserve that it may need to raise interest rates much higher than many people expect to get inflation under control, Damian J. Troise reported for the Associated Press (AP).

Photo Insert: The Fed has been raising rates aggressively in order to tame inflation by applying the brakes to the economy.

The S&P 500 fell 1% as of 10:19 a.m. Eastern. The Dow Jones Industrial Average fell 246 points, or 0.7%, to 33,312 and the Nasdaq fell 1%. Bond yields rose and hovered around multidecade highs.

The yield on the two-year Treasury note rose to 4.45% from 4.37% late Wednesday. The yield on the 10-year Treasury rose to 3.79% from 3.69% late Wednesday, Yuri Kageyama also reported for AP.

The Fed has been raising rates aggressively in order to tame inflation by applying the brakes to the economy. Investors have been hoping that more signs of easing inflation could help the central bank shift to less aggressive rate increases.

The central bank, though, has been clear about its intent to keep raising rates, possibly to unexpectedly high levels, to tame inflation. James Bullard, who leads the Federal Reserve Bank of St. Louis, reaffirmed that position in a presentation on Thursday.

The Fed has already raised its short-term rate to a range of 3.75% to 4%, up from nearly zero as recently as last March. Bullard suggested that the rate may have to rise to a level between 5% and 7% in order to quash stubbornly hot inflation, Matt Ott and Christopher Rugaber also reported for AP.

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