Stock market today: Wall Street falls to worst day in weeks on interest rate worries as jobs report looms | National News

NEW YORK (`) — U.S. stocks slumped Thursday after a Federal Reserve official raised the possibility of not making the interest rate cuts Wall Street expected this year if inflation worsens.

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 jobs report on Friday that could 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 when so 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.”

“There is a lot of momentum in the economy at the moment,” Kashkari said in an interview with Pensions & Investments.

Kashkari's hypothetical case, which he says depends on “a lot of ifs,” concerns one of the main drivers that drove the U.S. stock market up more than 20% from November to March: the expectation of multiple interest rate cuts. Lower interest rates are driving up investment prices while easing pressure on the economy, and stock prices had already jumped in some ways in line with expectations.

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.

Earlier in the morning, yields held firmer after a report showed that more U.S. workers filed for unemployment benefits last week, although the number is still low by historical standards.

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.

“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.

On the stock market, Nvidia fell from a gain of almost 2% at the start of the day to a decline of 3.4%. It was the heaviest single weight in the S&P 500.

Lamb Weston fell 19.4% after the frozen french fry maker said the move to a new scheduling system had affected its ability to fulfill customer orders. The company said the impact of the transition had likely passed, but lowered its sales and profit forecast for the year. It also cited weaker trends in restaurant traffic in the short term.

On Wall Street's winning side, Conagra Brands rose 5.4% after the owner of brands including Birds Eye and Duncan Hines reported a smaller decline in sales for the latest quarter than analysts had expected. It also delivered better profit than forecast.

Levi Strauss rose 12.4% after its latest quarterly results also beat expectations. In addition, the profit forecast for the full fiscal year was raised slightly as the company increases its sales of jeans directly to consumers.

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 U.S. benchmark crude rose $1.16 to $86.59, already up more than 20% this year. Brent crude, the international standard, rose $1.30 to $90.65.

` writers Christopher Rugaber, Yuri Kageyama and Matt Ott contributed.

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