Dow Loses Big on Rate Fears

The Dow Jones Industrial Average swung wildly Friday to close near its session low as Wall Street struggled to shake off fears of rapidly rising rates.

The 30-stock index ended a volatile week, tumbling 469.64 points, or 1.5%, to 30,932.37,

The S&P 500 shied away 18.19 points to 3,811.15, as energy and financial stocks pulled back.

The NASDAQ Composite recovered from its recent slump, picking up 72.91 points to 13,192.34, as Big Tech names rebounded after a big selloff in the previous session amid surging bond yields. Facebook, Microsoft and Amazon each rose more than 1%.

All three major averages posted weekly losses as fears of higher interest rates and inflation deepened. The S&P 500 slid 2.5% this week for its second negative week in a row. The 30-stock Dow fell 1.8%, and the NASDAQ was the relative underperformer this week, losing 4.9%.

Despite the weakness of the past week, the equity benchmarks all finished February with modest gains. The S&P 500 marched ahead 2.6%, and the Dow climbed 3.2%, the two indexes posting their third positive month in four. The tech-heavy benchmark gained 0.9% this month.

Energy gained 4.3% this week, bringing its February gains to more than 21%. Energy is the biggest winner by far amid expectations that consumers around the world will soon be driving and flying as they were prior to the COVID-19 pandemic. Financials also jumped 11.4% this month, benefiting from rising interest rates.

The weakness elsewhere came even after the personal consumption expenditures price index that the Federal Reserve watches indicated subdued inflation in January. The PCE index rose 0.3% for the month, slightly ahead of the 0.2% expectation but was up just 1.5% year over year, matching Dow Jones estimates.

Economists and investment managers say the bond market is reacting to positive economics as vaccines are rolled out and Gross Domestic Product forecasts improve, which should benefit corporate profits. But the move could also signal faster-than-expected inflation ahead.

Prices for 10-Year Treasurys were higher, weighing down yields to 1.41% from Friday’s 1.50%. Treasury prices and yields move in opposite directions.

Oil prices ducked $1.86 to $61.67 U.S. a barrel.

Gold prices plunged $45.30 to $1,730.10