Stocks turn lower on Wall Street as inflation worries grow

NEW YORK (AP) — Stocks turned lower in morning trading on Wall Street Friday as investors weighed the latest updates on inflation expectations, consumer spending and corporate earnings.

A report showing U.S. consumers raised their expectations for future inflation hurt markets worldwide, offering another signal the Federal Reserve may have to continue aggressively hiking interest rates to temper stubbornly hot inflation. The strategy raises the risk of a recession.

The S&P 500 fell 1% as of 10:35 a.m. Eastern, giving up an early gain of 1.2%. The Dow Jones Industrial Average fell 117 points, or 0.4%, to 29,920 and the Nasdaq fell 1.3%.

The market has been volatile throughout the week and especially on Thursday after a government report showed that inflation remains very hot. Major U.S. indexes staged their biggest comeback in years on Thursday in a reversal from steep morning losses.

Investors have been looking for any sign that could allow the Fed to eventually ease up on its interest rate increases. Inflation, though cooling in some areas of the economy, remains stubbornly hot overall. A survey from the University of Michigan on Friday showed that consumer confidence remains surprisingly strong despite high prices on a wide range of goods.

Bond yields rose after the Michigan report. The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.99% from 3.86% shortly before the report came out. The yield on the 2-year Treasury, which tends to track expectations for future Fed action, fell to 4.45% from 4.47%.

Wall Street is also reviewing the latest earnings reports for more clues about how companies are dealing with inflation.

Several big banks were bright spots in the market. JPMorgan Chase rose 2.1% after reporting earnings and revenue that topped Wall Street forecasts. Wells Fargo rose 2.9% after it reported strong revenue.

UnitedHealth Group rose 2.1% after raising its profit forecast for the year.

Technology stocks were biggest weights on the market and offset gains elsewhere. Many companies in the sector have pricey stock values which can have an outsized impact on the broader market. Chipmaker Nvidia fell 4.5%.

U.S. crude oil prices fell 2.8% and weighed down energy stocks. Chevron fell 2%.

A government report showed that the pace of sales at U.S. retailers was unchanged in September from August as rising prices for rent and food chipped away at money available for other things. The report was worse than economists anticipated.

Markets in Europe were higher after British Prime Minister Liz Truss has abandoned a planned cut to corporation taxes, scrapping a key part of an economic plan that set off weeks of market and political turmoil.