Stocks fall on Wall Street following Fed chief's comments

Stocks shed early gains and closed broadly lower on Wall Street Thursday after the head of the Federal Reserve said the central bank needs to take more aggressive action to fight high inflation. The S&P 500 fell 1.5%, the Dow Jones Industrial Average fell 1% and the Nasdaq fell 2.1%. American Airlines rose after telling investors it expects to turn a profit in the second quarter as more people return to travel. Tesla rose after the maker of electric cars and solar panels reported strong sales and a seven-fold increase in profits. Treasury yields rose.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

Stocks shed early gains and were broadly lower in afternoon trading on Wall Street Thursday after the head of the Federal Reserve said the central bank needs to take more aggressive action to fight high inflation.

In a panel discussion held by the International Monetary Fund, Fed Chair Jerome Powell said the Fed must move faster than it has previously to tackle inflation, which suggests sharp interest rate increases are likely in coming months.

The S&P 500 fell 1.6% as of 3:40 p.m. Eastern. The Dow Jones Industrial Average fell 404 points, or 1.2%, to 34,755 and the Nasdaq fell 2.2%.

The afternoon sell-off knocked the S&P 500 and Nasdaq into the red for the week. The broader market has had a choppy week as investors review the latest round of corporate earnings amid lingering concerns about rising inflation and the Fed’s shift away from an ultra-low interest rate policy.

The Fed has already announced a quarter-percentage point rate hike and Wall Street expects a half-percentage rate hike at its next meeting in two weeks. Other central banks have also moved to raise interest rates to try and temper the impact of rising prices on businesses and...