U.S stocks plunged on Friday after the Federal Reserve decided against extending a pandemic-era capital break for banks. Dow Jones Industrial Average shed 340 points in a session that also stoked a rise in bond yields.
- S&P 500 fell 0.7% while the tech-heavy Nasdaq Composite traded 0.3% lower
- The rule allowing banks to hold less capital against Treasuries and other holdings was implemented to calm the bond market during the crisis and encourage banks to lend.
- Analysts point out that the Fed decision could have some adverse effects, as banks can sell off some of their Treasury holdings that could send yields higher.
- JPMorgan and Wells Fargo slid more than 3%, while Goldman Sachs declined 1.5%
- The 10-year Treasury yield reversed slightly higher at 1.74%, almost hitting its 14-month high above 1.75%.
- Rising bond yields can signal confidence about economic recovery, making high-growth stocks look less attractive to investors.
Most U.S stocks are currently declining. DJI is down 0.72%, S&P 500 is down 0.17%, Nasdaq is up 0.47%.