Stock Market Today: Asian stocks are mostly lower after Wall Street slumped on interest rate cut concerns

TOKYO (`) — Asian stocks were mostly lower Friday after a U.S. Federal Reserve official said the central bank may not implement any of the interest rate cuts that Wall Street has been betting on this year, citing inflation concerns.

Japan's benchmark Nikkei 225 fell 2.4% to 38,812.24. Sydney's S&P/ASX 200 slipped 0.8% to 7,756.20. South Korea's Kospi fell almost 1.0% to 2,714.84. Hong Kong's Hang Seng lost 0.8% to 16,594.79.

Tensions in the Middle East increased pessimism. However, some analysts suggested the Fed could cut interest rates at least once later this year.

“There are already clear signs of slowing economic activity and conditions for continued wage pressures,” said Tan Jing Yi of Mizuho Bank in Singapore.

On Wall Street, the S&P 500 fell 1.2% on its worst day in seven weeks. Previously, a gain of almost 1% brought it close to its record set last week.

The Dow Jones Industrial Average fell 530 points, or 1.4%, after reversing a nearly 300-point advance. The Nasdaq Composite fell 1.4%.

Financial markets were already on edge as traders made their final moves ahead of a U.S. jobs report on Friday that could also rattle the market.

A late-day rise in oil prices amid ongoing tensions in the Middle East caused unrest and threatened to put more pressure on inflation after sharp gains in oil prices this year.

Around the same time, Treasury yields fell in the bond market, which may be a signal that investors are looking for safer havens, and some level of fear rose among U.S. stock investors.

Stocks plunged after Minneapolis Fed President Neel Kashkari said he doubted the need for a rate cut because many areas of the economy appear solid despite high interest rates.

He had previously planned two rate cuts this year, “but if inflation continues to move sideways, I would question whether we need to cut rates at all.”

“The economy is going strong right now,” Kashkari said in an interview with Pensions & Investments.

Kashkari's hypothesis, which he says depends on “a lot of ifs,” hits on one of the key drivers that drove the U.S. stock market up more than 20% from November to March. Lower interest rates increase the price of investments while reducing pressure on the economy.

Traders had already sharply cut their forecasts for how many interest rate cuts the Federal Reserve would make this year, from six at the start of the year to three recently. In this they generally agree with Fed officials.

But several recent economic data reports came in hotter than expected, aside from some disappointingly high inflation reports earlier in the year that could be seen as temporary blips. A report earlier this week that showed a surprise return to growth in U.S. manufacturing raised concerns.

Kaskhari is not a voting member of the Fed's policymaking committee this year, but that doesn't mean he doesn't have a voice at the table.

“The market remains extremely sensitive to signs that the data-dependent Fed may need to slow its rate-cutting cycle this year, as Neel Kashkari commented this afternoon,” said Quincy Krosby, chief global strategist at LPL Financial.

In the bond market, the 10-year Treasury yield fell to 4.30% from 4.35% late Wednesday. The two-year Treasury yield, more in line with Fed expectations, fell to 4.64% from 4.67% late Wednesday.

Wall Street wants the labor market to cool enough to remove upward pressure on inflation, but not so much that it puts too many people out of work and triggers a recession.

That raises anticipation for a report next Friday in which the U.S. government will show how many new hires were made across the country last month. Economists expect there will be a slowdown in March compared to February.

Stocks have recovered. ` business correspondent Damian Troise reports.

“As always, the monthly jobs report will have the final say,” said Chris Larkin, managing director of trading and investing at Morgan Stanley’s E-Trade.

Overall, the S&P 500 fell 64.28 points to 5,147.21. The Dow Jones Industrial Average fell 530.16 to 38,596.98 and the Nasdaq Composite fell 228.38 to 16,049.08.

In the oil market, a barrel of US benchmark oil rose 14 cents to $86.73 a barrel. The stock rose $1.16 to close at $86.59 on Thursday. Brent crude, the international standard, rose 31 cents to $90.96.

In foreign exchange trading, the US dollar fell to 151.24 Japanese yen from 151.30 yen. The euro was at $1.0827, down from $1.0841.

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` business reporter Stan Choe contributed.

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The summary of an earlier version of this story incorrectly reported the S&P 500's change as 1%.