Stocks drop on Fed speculation

U.S. stocks erased gains to end lower for a second day, while the dollar jumped with Treasury yields on speculation that the pickup in inflation signaled by data since the Federal Reserve’s last meeting will force a faster tightening schedule.

The catalyst for the lateday selloff was Fed meeting minutes that painted the picture of a central bank increasingly confident that economic growth will pick up steam but still concerned inflation could miss targets. The initial reaction saw stocks jump with bonds, while the dollar fell.

Assets reversed course as investors pointed to economic data subsequent to the gathering that upend the idea of lagging inflation. The S&P 500 Index erased a gain that topped 1 percent to finish at a one-week low and Bloomberg’s dollar index climbed a fourth day. The 10-year Treasury yield rose to 2.94 percent.

When officials next convene March 20, they will consider for the first time a January jobs report that indicated rising wages and consumer prices that surged faster than forecast last month, two data points that belie their concern that inflation will lag.

Investors have also been watching a deluge of Treasury sales that are slated to put $258 billion up for auction this week. Surging rates gave impetus to one of the steepest equity selloffs in years two weeks ago. While investors seem to have adjusted to 10-year yields at a four-year high for now, the rush of fresh debt could push them higher, weakening the case for owning stocks at elevated valuations.

European equities rose even after data showed a fading outlook for manufacturing and services in the region.