Hawkish comments by Federal Reserve Chairperson Jerome Powell pushed stocks in U.S. markets down on Thursday, with the Fed chief pointing to a half-point rate hike.
Stocks opened higher following good results from Tesla and upbeat comments from leading airlines. But the markets reversed course at mid-session and ended decisively lower as the yield on the 10-year U.S. Treasury note rose above 2.9%.
Fed Chair Jerome Powell, who has signaled the U.S. central bank will have to move more aggressively to counter record U.S. inflation, explicitly said a half-point interest rate increase is "on the table" for next month's policy meeting.
"It is appropriate, in my view, to be moving a little more quickly. And I also think there's something in the idea of front-end loading whatever accommodation one thinks is appropriate," Powell said during a debate on the global economy hosted by the International Monetary Fund (IMF) on the sidelines of its spring meetings.
The comments followed remarks from a top European Central Bank (ECB) that opened the door to faster interest rate hikes.
"Today, you can basically say that for stocks and bonds, it's all about the ECB and the Fed," said LBBW's Karl Haeling.
The Dow Jones Industrial Average finished down 1.1% at 34,792.76.
The broad-based S&P 500 dropped 1.5% to end at 4,393.66, while the tech-rich Nasdaq Composite Index fell 2.1% to 13,174.65.
Tesla rose 3.2% as it reported a record $3.3 billion quarterly profit and projected another strong year of production growth in 2022 despite lingering supply chain woes.
Twitter rose 0.7% after Tesla CEO Elon Musk announced he had lined up enough financing to acquire the social media company and said he was weighing a tender offer directly to shareholders.
United Airlines jumped 9.3% and American Airlines rose 3.8% after the companies offered bullish second-quarter outlooks amid the return in travel demand.
But Disney dropped 2.4% after Florida's legislature scrapped the self-governing status of its Orlando theme park in a move widely seen as retaliation for a bitter row in the state over what has become known as the "Don't Say Gay" law.