Stock Market Today: Dow Jones Falls 600 Points as Rate Concerns Overshadow Nvidia's Skyrocketing Profits

NEW YORK (AP) Most U.S. stocks fell after strong economic reports raised the possibility that interest rates would remain painfully high. The weakness was widespread Thursday and overshadowed another blowout earnings report from market heavyweight Nvidia. The S&P 500 fell 0.7% and fell further from its record high set earlier this week. The Dow Jones Industrial Average fell more than 600 points and the Nasdaq composite slipped 0.4%. Treasury yields rose in the bond market after reports showed accelerated growth in U.S. business activity and a resilient job market. Rising yields weighed on much of the market, particularly dividend-paying companies like real estate stocks.

THIS IS A LATEST UPDATE. Earlier AP story follows below.

NEW YORK (AP) In the latest example of how good news for the economy can be bad for Wall Street, most U.S. stocks fell Thursday after strong economic reports raised the possibility that rates of Interest remains painfully high. The weakness was widespread and overshadowed another report on skyrocketing profits of market heavyweight Nvidia.

The S&P 500 was down 0.8% in afternoon trading, moving further away from its record high set earlier this week. The Dow Jones Industrial Average was down 623 points, or 1.5%, as of 2:30 p.m. Eastern Time, and the Nasdaq Composite Index was down 0.4%.

Stocks have suffered under the weight of rising yields in the bond market. Treasury yields added pressure following stronger-than-expected reports on the U.S. economy, which forced traders to rethink their bets on when the Federal Reserve might offer relief to financial markets by cutting bond rates. interest.

A preliminary report suggests that growth in U.S. business activity is reaching its fastest pace in more than two years. S&P Global said in its report that growth has improved for companies not only in the services sector but also in the struggling manufacturing sector.

A separate report shows that the US labor market remains strong despite high interest rates. Fewer workers applied for unemployment Profits last week exceeded those expected by economists, indicating that layoffs remain relatively low.

Treasury yields had remained mostly flat following the release of the unemployment report, but rose immediately after the release of the economic activity report, which also suggested sales prices remained stubbornly high.

With upward pressure on inflation now coming from both the manufacturing and services sectors, this suggests that the last mile to the federal government's 2% target still appears elusive, according to Chris Williamson, economist at Chief Business Officer at S&P Global Market Intelligence.

The Fed is trying to pull off the difficult feat of slowing the economy enough through high rates to fully control inflation, but not so much that it causes a painful recession. To do this, it is keeping its main interest rate at the highest level in more than two decades, and Wall Street is eagerly awaiting some easing.

A stronger-than-expected economy could cause the Federal Reserve to wait longer to cut interest rates, after traders have already cut interest rates. previous forecasts too optimistic. Worse yet, it could force the Federal Reserve to raise rates further and cause a deep recession to bring inflation down completely.

Hopes are still high for at least one rate cut this year. But traders backed away from some of those bets following Thursday's reports.

The 10-year Treasury yield, which makes it possible to set rates for mortgages and other loans, increased to 4.47% against 4.43% Wednesday evening. The two-year yield, which more closely tracks expectations for Federal Reserve action, rose to 4.93% from 4.87%.

That helped send shares of utilities and real estate companies to some of the markets where losses were steepest. When interest rates are high, bonds pay more interest and can drive away income-seeking investors who would otherwise buy utilities or real estate investment trusts for their high dividends.

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

The biggest drop in the S&P 500 came from Live National Entertainmentwhich fell 8.2% after the Justice Department accused it and its Ticketmaster business of exercising an illegal monopoly on live events in the country.

VF Corp., the company behind The North Face, Vans, Timberland and other brands, fell 3.5% after reporting a loss for the latest quarter, as well as weaker revenue than expected by analysts.

They helped more than offset the 9.3% rise in Nvidia, which released its latest knockout earnings report Wednesday evening. Its revenue jumped 262% in the most recent quarter from a year earlier, and its profit jumped 629%. The company's chips help train artificial intelligence systems, and the demand for them has been voracious.

Nvidia also increased its dividend as its CEO, Jensen Huang, touted the start of the next industrial revolution.

Concern is growing that Wall Street's frenzy around AI's potential has created a bubble in which prices have soared too high and expectations have become too strict. But Nvidia's continued and meteoric growth has muted some criticism.

In foreign stock markets, indices were mixed in Europe and Asia. Japan's Nikkei 225 rose 1.3%, partly on strength in semiconductor-related companies following Nvidia's powerful earnings report. Indexes fell 1.7% in Hong Kong and 1.3% in Shanghai, amid questions over whether a new wave of policies aimed at helping China's ailing property sector will be enough to end the industrial crisis.

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AP Business writers Yuri Kageyama, Matt Ott and Alex Veiga contributed.