Dow falls 230 points, stocks drop as Treasury yields climbs above 4%

U.S. stocks were heading lower in the final hour of trade Thursday as long-term Treasury rates shot above 4% and a surprisingly resilient U.S. economy ramped up concerns of the Federal Reserve needing to keep rates higher for longer to contain inflation.

The Dow Jones Industrial Average DJIA, -0.68% was down about 223 points, or 0.6%, to about 35,298, according to FactSet data. The S&P 500 index SPX, -0.58% was 0.5% lower and the Nasdaq Composite Index COMP, -0.49% was off 0.4%, at last check. “The entire advance in the stock market was a recession is going to happen and the Fed is going to lower rates,” said Kent Engelke, chief economic strategist at Capitol Securities Management, in a phone interview. But second-quarter GDP data sped up to 2.4% on a yearly basis compared with 2% growth in the quarter ended in March, according to a Thursday update.

Fed Chair Jerome Powell also said Wednesday that Fed staff view a U.S. recession as avoidable, in a press conference after the central bank bumped up its policy rate to the highest level in 22 years. Investors on Thursday also were focused on a report indicated that Japan may be looking to throw in the towel on its policy of yield curve control, or keeping borrowing rates in check. Yields in the 10-year Treasury TMUBMUSD10Y, 4.005% and 30-year note TMUBMUSD30Y, 4.053% were both shooting higher, above 4%, at last check, according to FactSet.

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