The Dow Jones Industrial Average fell on Friday after the Federal Reserve’s decision to not extend a pandemic-era capital break for banks stoked a rise in bond yields and a sell-off in financials.
The 30-stock index came off its lows of the morning, but remained down 141.33 points by midday Friday at 32,720.97.
The S&P 500 eked its way 2.66 points into the green at 3,918.12.
The NASDAQ Composite regrouped 77.22 points to 13,139.39, as investors bought the dip in tech shares.
Bank stocks sold off in unison following the Fed’s decision. JPMorgan and Wells Fargo both slid more than 3%, while Goldman Sachs fell 1.5%. Bank of America also slipped 3%. These names got a lift earlier this week from rising rates and have all rallied double digits this year.
Shares of FedEx jumped 6% Friday after the delivery company beat expectations on the top and bottom lines for its fiscal third quarter.
Nike’s stock slipped by 4% after third-quarter revenues were weaker than anticipated.
The major averages were on track to post a losing week. The S&P 500 is off by 0.9% this week and the NASDAQ is down 1.3%. The Dow has dipped 0.3%.
The central bank on Friday declined to extend a rule expiring at the end of the month that relaxed the supplementary leverage ratio for banks during the pandemic. The rule allowing banks to hold less capital against Treasurys and other holdings was implemented to calm the bond market during the crisis and encourage banks to lend.
The decision could have some adverse effects, traders have warned, if in response banks sell some of their Treasury holdings. That could send yields even higher at a time when a rapid rise in rates is already unnerving investors.
Prices for 10-Year Treasurys slipped, raising yields to 1.72% from Thursday’s 1.71%. Treasury prices and yields move in opposite directions.
Oil prices regained 56 cents to $60.56 U.S. a barrel.
Gold prices gained four dollars to $1,736.50.