U.S. stocks fell broadly in morning trading Friday, pulled down by sharp declines in utilities and consumer-focused companies. Investors were weighing the likelihood that the Federal Reserve will raise its key interest rate this year, following new remarks by a Fed bank president. Energy stocks also fell as the price of crude oil turned lower following a rally the day before.
KEEPING SCORE: The Dow Jones Industrial Average fell 188 points, or 1 percent, to 18,291 as of 11:10 a.m. Eastern time. The Standard & Poor’s 500 index slid 25 points, or 1.2 percent, to 2,156. The Nasdaq composite index lost 59 points, or 1.1 percent, to 5,199.
RATE-HIKE SPECULATION: In a speech early Friday, Fed Bank of Boston President Eric Rosengren suggested a case could be made for the central bank to raise its key interest rate sooner rather than later. The Fed is scheduled to hold a policy meeting later this month. In recent weeks, few Fed observers have expected the Fed to lift rates this month, but a December hike is looking more likely, said JJ Kinahan, chief strategist at TD Ameritrade.
“We have a good probability that we’re getting it by the end of the year,” Kinahan said.
DRILLED: Several oil and gas production and drilling companies were down, giving back some of their gains from a rally Thursday. Diamond Offshore Drilling led the decliners in the S&P 500, losing 89 cents, or 5.1 percent, to $16.51. Williams Cos. slid $1.03, or 3.3 percent, to $30.12, while Transocean shed 34 cents, or 3.2 percent, to $10.14.
BOND YIELDS FALLOUT: A sharp rise in bond yields was weighing on utilities, real-estate investment trusts and other high-dividend stocks. As yields rise, bonds become more competitive options for investors seeking income. Ventas fell $2.65, or 3.6 percent, to $70.33, while SL Green Realty slid $3.40, or 2.9 percent, to $113.19. Digital Realty Trust lost $3.02, or 3 percent, to $97.45. AT&T slid 64 cents, or 1.6 percent, to $40.55.
GOOD QUARTERS: Furniture and housewares retailer Restoration Hardware and fiber optic components supplier Finisar were up sharply on strong quarterly results. Restoration Hardware gained $3.11, or 8.8 percent, to $38.40. Finisar added $3.02, or 13 percent, to $26.25.
OVERSEAS: Disappointment over Thursday’s decision by the European Central Bank to keep monetary policy unchanged continued to weigh on European markets. Germany’s DAX fell 1.2 percent, while France’s CAC 40 lost 1.3 percent. Britain’s FTSE 100 was down 1.4 percent. In Asia, concerns over North Korea’s latest nuclear test hit stocks in South Korea. The Kospi index fell 1.3 percent. Japan’s benchmark Nikkei 225 rebounded from an initial drop to finish little changed, while Hong Kong’s Hang Seng rose 0.8 percent.
ENERGY: Oil prices were headed lower after rallying a day earlier. Benchmark U.S. crude fell $1.24, or 2.6 percent, to $46.36 a barrel. Brent crude, used to price international oils, was down $1.28, or 2.6 percent, at $48.73 a barrel.
BONDS: Bond prices fell. The yield on the 10-year Treasury rose to 1.67 percent from 1.60 percent late Thursday. The 10-year Treasury yield is at its highest level since late June.
CURRENCIES: The dollar rose to 102.71 yen from 102.49 on Thursday. The euro slipped to $1.1223 from $1.1257.