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U.S. stocks were lower in early action Friday, with bank stocks under pressure after the Federal Reserve said it wouldn’t extend temporary relief from capital-requirement rules for banks.

The decision also put upward pressure on Treasury yields, crimping an attempted rebound by tech-related shares.

What are major indexes doing?
  • The Dow Jones Industrial Average DJIA, -0.73% fell 256.69 points, or 0.8%, to 32,605.61.
  • The S&P 500 SPX, -0.21% was off 17.60 points, or 0.5%, at 3,897.86.
  • The Nasdaq Composite COMP, +0.47% was down 13.60 points, or 0.1%, at 13,102.57.

On Thursday, stocks stumbled, with the Nasdaq Composite falling 3% as it suffered the brunt of selling pressure as bond yields rose. The Dow Jones Industrial Average gave up a gain to end lower, while the S&P 500 also slumped as a sharp selloff by oil futures dragged down energy shares.

What’s driving the market?

Stocks slipped after the Fed said it it would allow an exemption that let banks to exclude Treasurys and deposits with the central bank from calculation of a key bank capital measure known as the supplementary leverage ratio to expire on March 31.

Financial sector stocks in particular fell after the Fed announcement. JPMorgan JPM, -3.48% fell 3.8% and Wells Fargo WFC, -2.66% dropped 2.8%, while Goldman Sachs GS, -1.68% fell 1.9%.

Bond yields remain the main driver for financial markets, analysts said. The yield on the 10-year Treasury note TMUBMUSD10Y, 1.734% erased an earlier decline to rise to 1.727% after the Fed decision, testing a 14 month high seen Thursday.

The jump in bond yields over the past seven weeks has hit technology and other growth stocks whose high valuations rely on expectations for earnings far into the future. The equities slump on Thursday came after the Federal Reserve struck a dovish tone at its policy meeting on Wednesday but bond yields rose on expectations for economic recovery and inflation this year.

“Although the Fed couldn’t have sounded more dovish this week, Powell and his colleagues have inadvertently given the green light for yields to continue surging by signaling that they are happy to let inflation overshoot their target as they prioritize growth and employment,” said Raffi Boyadjian, senior investment analyst at XM, in a note.

Read: The Fed is dovish but bond yields soared. What gives?

Despite some signs of consolidation Friday, “it’s hard to see this rout in bonds subsiding soon,” Boyadjian said. “Without clear communication from the Fed on how far it is willing to see financial conditions tighten before it identifies the moves as disorderly, yields may keep on rising until markets find out what the central bank’s tolerance threshold is.”

Friday also marks quadruple-witching day, a term that refers to the simultaneous expiration of stock-index futures contracts, options on those contracts, single-stock futures and stock options. The quarterly event can sometimes lead to volatility.

Which companies are in focus?
  • Shares of Nike Inc. NKE, -4.09% were down 3.7% after the athletic apparel company said late Thursday that sales grew slower than expected in the fourth quarter due to supply-chain disruptions, while earnings topped estimates.
  • FedEx Corp. FDX, +5.80% late Thursday reported fiscal third-quarter profit and sales that easily topped Wall Street forecasts, saying that it expects demand for its logistics and delivery business “to remain very high for the foreseeable future.” Shares were up 5.6%.
How are other markets trading?
  • The ICE U.S. Dollar Index DXY, +0.28%, a measure of the currency against a basket of the greenback’s six major rivals, was up 0.2%.
  • Oil futures were higher after Thursday’s slump, with the U.S. benchmark CL.1, -0.07% down 0.1% at $59.99 a barrel.
  • Gold futures edged higher, with the April contract GCJ21, +0.13% up 0.1% to $1,734.10 an ounce.
  • In Europe, the Stoxx 600 index SXXP, -0.90% was down 0.9%, while London’s FTSE 100 UKX, -1.21% shed 1.2%.
  • In Asia, the Shanghai Composite SHCOMP, -1.69% dropped 1.7%, Hong Kong’s Hang Seng Index HSI00, +1.30% fell 1.4% and Japan’s Nikkei 225 NIK, -1.41% dropped 1.4%.