Stocks extend losses as investors weigh hawkish Powell remarks, more corporate earnings

U.S. stocks plummeted Friday afternoon as investors weighed a bevy of corporate earnings and braced for more aggressive monetary tightening by the Federal Reserve in coming months.

The S&P 500 plunged 2.5%, while the Dow Jones Industrial Average wiped out 860 points, on pace for its worst day of the year if losses extend into the close. The tech-heavy Nasdaq Composite tumbled 2.2%. Meanwhile, the 10-year U.S. Treasury yield remained at 2.9%, the highest level since December 2018.

“Markets are very uneasy about the growing likelihood of a policy error by the Federal Reserve,” Harris Financial Group Managing Partner Jamie Cox said in a note. “When a Fed official suggests a 50 basis points hike, markets immediately start trying to price in 75 basis point hikes — it’s madness really.”

The losses follow remarks from Fed Chair Jerome Powell at a panel hosted by the International Monetary Fund Thursday signaling a 50-basis point rate increase was “on the table” for May, when the U.S. central bank holds its next policy-setting meeting. The Fed chair also reiterated that policymakers were committed to “front-end loading” inflation-fighting efforts.

“Today’s market action reflects the power of Jerome Powell’s comments yesterday, that the Fed is determined to slay climbing inflation and virtually acknowledging that the market can expect a 50 basis point hike in May,” LPL Financial chief equity strategist Quincy Krosby said in comments Friday.

Addressing European Central Bank…