Wall Street falls on rates worries, ASX set to slump

Wall Street falls on rates worries, ASX set to slump

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A hotter-than-expected economy could push the Federal Reserve to wait longer before cutting interest rates, after traders have already scaled back their overly optimistic earlier forecasts. Worse, it could force the Federal Reserve to raise rates further and trigger a deep recession to bring inflation down entirely.

Hopes are still high for at least one rate cut this year. But traders pulled back some of those bets after Thursday's reports.

The yield on the 10-year Treasury, which helps set rates on mortgages and other loans, rose to 4.47 percent from 4.43 percent late Wednesday. The two-year yield, which more closely tracks expectations for Federal Reserve action, rose to 4.93% from 4.87%.

That helped send utilities and real estate stocks to some of the market's steepest losses. When interest rates are high, bonds pay more interest and can crowd out income-seeking investors who would otherwise buy utilities or real estate investment trusts for their high dividends.

American Water Works sank 3.6% and Boston Properties fell 3.5%.

The biggest decliner within the S&P 500 was Live Nation Entertainment, which sank 8.2% after the Justice Department accused it and its Ticketmaster business of having an illegal monopoly on events live in the country.

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VF Corp., the company behind The North Face, Vans, Timberland and other brands, fell 3.5 percent after reporting a loss in the latest quarter, along with weaker-than-expected revenue .

They helped more than offset a 9.3 percent jump for Nvidia, which reported its latest knockout earnings report Wednesday afternoon. Its revenue rose 262 percent in the last quarter from a year earlier, and its profits rose 629 percent. The company's chips help train artificial intelligence systems, and demand for them has been voracious.

Nvidia also raised its dividend as CEO Jensen Huang announced how “the next industrial revolution has begun.”

Concerns have grown that Wall Street's frenzy over AI's potential has created a bubble where prices have skyrocketed and expectations have become too harsh. But Nvidia's continued growth tempered some of the criticism.

In foreign markets, indices were mixed between Europe and Asia. Japan's Nikkei 225 rose 1.3 percent in part on strength in semiconductor-related companies after Nvidia's strong earnings report. Indexes fell 1.7 percent in Hong Kong and 1.3 percent in Shanghai amid questions about whether a new flurry of policies to help China's troubled property sector will be enough to end the crisis in sector

AP

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