Stocks finished lower on Friday after St. Louis Federal Reserve Bank President James Bullard said the central bank has started talks on trimming the pace of its $120 billion in monthly bond purchases.
The Dow Jones Industrial Average ended down 533 points, or 1.58%, to 33,290, the S&P 500 fell 1.31% and the Nasdaq finished down 0.92%.
For the week, the Dow took a 3.4% punch, the S&P 500 gave up 1.9%, and the Nasdaq eased 0.3%.
Bullard told CNBC that the Fed has begun discussing pulling back on bond purchases, support that has helped push stock markets to records.
The Fed official also said Friday he saw an interest-rate increase taking place in 2022 as prices have risen faster than expected. His assessment for a rate hike next year is earlier than the Fed signaled this week.
“We’re expecting a good year, a good reopening. But this is a bigger year than we were expecting, more inflation than we were expecting,” Bullard told CNBC.
"I think it’s natural that we’ve tilted a little bit more hawkish here to contain inflationary pressures.”
The yield on the benchmark 10-year Treasury note moved Friday to below 1.5%, trading at 1.448%.
Stocks finished mixed on Thursday with high-growth tech shares posting solid gains after the Fed indicated it likely would raise rates two times by the end of 2023.
As for tapering, Federal Reserve Chairman Jerome Powell said it likely was “a ways away,” but Wall Street's guessing game of exactly when the Fed might begin the process has begun.
Commodity markets excluding oil, meanwhile, were having their worst week in eight months, with copper and gold slumping the most in more than a year.
Traders have been reacting to China's moves to tame price speculation and subtle suggestions in economic data that post-pandemic demand may be overstated or at the very least damped by stubborn supply-chain bottlenecks that continue to clip manufacturing growth.
Oil prices in the U.S. rose 0.84% to $71.64 a barrel on Friday.
Volatility likely was heightened Friday by the expiration of options and futures on indexes and equities, an event known as “triple witching.”
Adobe (ADBE) - Get Report finished up 2.6% Friday after the software company's second-quarter earnings and third-quarter forecast topped analysts' estimates.