NEW YORK (AP) — U.S. stocks fell Friday toward their worst loss since Election Day as the big bump Wall Street got from last week’s victory for Donald Trump and cut to interest rates by the Federal Reserve keeps fading.
The S&P 500 sank 1.4% and was heading for a losing week and its worst day since October. The Dow Jones Industrial Average was down 381 points, or 0.9%, as of 12:32 p.m. Eastern time, and the Nasdaq composite was 2.2% lower.
Makers of vaccines helped drag the market down after President-elect Donald Trump said he wants Robert F. Kennedy Jr., a prominent anti-vaccine activist, to be his Secretary of Health and Human Services. Moderna tumbled 9.8%, and Pfizer fell 4.8% amid concerns about a possible hit to profits.
Kennedy still needs confirmation from the Senate to get the job, and some analysts are skeptical about his chances because of his views on vaccines and criticism of the pharmaceutical industry.
“However, if Kennedy is confirmed, it is hard to bookend risks for investors as his views are so outside the traditional Republican health policy orthodoxy,” Raymond James analyst Chris Meekins wrote.
Meekins is a former deputy assistant secretary at the department known as HHS.
“Investors may need to forget everything they thought they knew about Republicans and healthcare,” he said. “Kennedy’s appointment may make it less likely traditional qualified experienced (Republican) staff will agree to join HHS, creating more uncertainty.”
The only stock in the S&P 500 to fall more than Moderna was Applied Materials, which dropped 8.5% even though it reported a stronger profit for the latest quarter than analysts expected. The provider of manufacturing equipment and services to the semiconductor industry gave a forecasted range for upcoming revenue whose midpoint was short of analysts’ expectations.
The pressure is on companies to deliver big growth, in part because their stock prices have been rising so much faster than their earnings. That’s made the broad stock market look more expensive by a range of measures, which has critics calling for at least a fade. The S&P 500 is still up 23% for the year and near its all-time high set a few days ago, despite this week’s weakness.
Stocks had been broadly roaring since Election Day, when Trump’s victory sent a jolt through financial markets worldwide. Investors immediately began sending up stocks of banks, smaller U.S. companies and cryptocurrencies as they laid bets on the winners coming out of Trump’s preference for higher tariffs, lower tax rates and lighter regulation.
But investors are also taking into account some of the potential downsides from Trump’s return to the White House.
Besides Friday’s hit to vaccine makers, Treasury yields have also been climbing in the bond market on both the economy’s surprising resilience and worries that Trump’s policies could spur bigger U.S. government deficits and faster inflation.
That’s forced traders to recalibrate how much relief the Federal Reserve could provide for the economy next year through cuts to interest rates. The Fed earlier this month lowered its main interest rate for the second time this year, and past forecasts published by Fed officials indicated more cuts were likely to come through 2025.
Lower interest rates can act as fuel for the economy and stock market, particularly after the Fed had kept rates at a two-decade high, but they can also put upward pressure on inflation.
On Thursday, Fed Chair Jerome Powell suggested the U.S. central bank will be cautious about future decisions on interest rates. “The economy is not sending any signals that we need to be in a hurry to lower rates,” he said, though he declined to discuss how Trump’s policies could alter things.
