Fed chief spooks market; Dow falls about 300 points

NEW YORK » Treasury yields rose Tuesday, and the Standard & Poor’s 500 index slid to its first loss in four days after the head of the Federal Reserve said he’s feeling more optimistic about the economy.

The testimony by Fed Chairman Jerome Powell before Congress was highly anticipated, and he gave encouraging words about the economic data that have arrived in recent weeks. But some investors speculated they could mean the central bank will get more aggressive in raising interest rates than the market has prepared for.

“My personal outlook for the economy has strengthened since December,” Powell said in response to a question about whether the recently passed tax cut and other moves by Congress have changed his outlook for how quickly the Fed will raise interest rates.

The immediate reaction in the bond market was to send Treasury yields higher, and the yield on the 10-year note climbed to 2.90 percent from 2.86 percent late Monday. It had been down earlier in the morning.

Higher interest rates can hurt stock prices by making bonds more attractive. Generally, when interest rates are rising, companies need to produce bigger profits just for their stock prices to stay flat.

The Dow Jones industrial average lost 299.24, or 1.2 percent, on Tuesday to close at 25,410.03. On Monday, the Dow gained 399 points.

The S&P 500 fell 35.32 points, or 1.3 percent, on Tuesday to close at 2,744.28; and the Nasdaq composite fell 91.11, or 1.2 percent, to 7,330.35.

The S&P and Nasdaq losses erased those indexes’ gains from a day earlier.