Stocks slump on Wall Street

NEW YORK (AP) — Stocks are slumping again on Friday as the sharp, recent surge for interest rates keeps weighing on Wall Street. Some disappointing profit reports from companies also shook what's been the market's main pillar of support.

The S&P 500 was 1.2% lower in morning trading and on pace to close out a third straight losing week. The Dow Jones Industrial Average was down 484 points, or 1.4%, at 34,308, as of 11:15 a.m. Eastern time, and the Nasdaq composite was 0.7% lower.

A day earlier, Wall Street seemed set for healthy gains for the week after American Airlines, Tesla and other big companies reported strong profits or better forecasts for future earnings than analysts expected. A long parade of such corporate optimism has helped stocks remain resilient, even with so many worries swirling about rising rates, inflation, the war in Ukraine and the coronavirus.

But markets buckled as the chair of the Federal Reserve indicated the central bank may indeed hike short-term interest rates by double the usual amount at upcoming meetings, starting in two weeks.

The Fed has already raised its key overnight rate once, the first such increase since 2018, as it aggressively removes the tremendous aid thrown at the economy through the pandemic. It's also preparing other moves to put upward pressure on longer-term rates.

By making it more expensive for businesses and households to borrow, the higher rates are meant to slow the economy, which should hopefully halt the worst inflation in generations.