By David French

(Reuters) – Wall Street tumbled more than 2.5% on Friday, ensuring the three main benchmarks ended in negative territory for the week, as surprise earnings news and increased certainty around aggressive near-term interest rate rises took its toll on investors.

It was the third straight week of losses for both the S&P 500 and the Nasdaq, while the Dow Jones posted its fourth weekly decline in a row.

For the Dow, its 2.82% drop on Friday was its biggest one-day fall since October 2020.

Exaggerated trading swings have become more common recently, as traders adjust to new data points from earnings, as well as when rates will rise again. For the Nasdaq, Friday was the eighth session in April, out of 15 trading days this month, where the index either rose or fell by more than 2%.

“It’s not very common, over the course of my time doing this job, for the market to move 2% in either direction and to think ‘there’s not too much to read into that’,” said Craig Erlam, senior market analyst at OANDA.

“That’s not normal, but that’s just how things have been for such a long time now.”

Concerns about risks from interest rate hikes continued to reverberate after Federal Reserve Chair Jerome Powell’s hawkish pivot on Thursday, where he backed moving more quickly to combat inflation and said a 50-basis-point increase would be “on the table” when the Fed meets in May.

The idea of “front-end loading” the U.S. central bank’s retreat from super-easy monetary policy, which Powell articulated support for on Thursday, has also forced traders to re-evaluate how aggressive subsequent rate rises would be.

The CBOE Volatility index, also known as Wall Street’s fear gauge, jumped on Friday, ending at its highest level since mid-March.

Meanwhile, the latest earnings forecasts to jolt investors came from healthcare, with HCA Healthcare and Intuitive Surgical Inc the worst performers on the S&P 500.

HCA slumped 21.8% after reporting a downbeat profit view, while other hospital operators felt the contagion: Tenet Healthcare, Community Health Systems and Universal Health Services all tumbled between 14% and 17.9%.

Surgical robot maker Intuitive Surgical dropped 14.3% after warning of weaker demand from hospitals due to tighter finances.

All 11 major S&P 500 sectors were down, although the 3.6% slip by healthcare was outdone by materials, which was off 3.7%.

Materials was weighed down by Nucor Corp – down 8.3% after hitting a record high after posting earnings on Thursday – and Freeport-McMoRan Inc, which slipped 6.8% as investors fretted over how interest rate hikes would impact copper miners.

The Dow Jones Industrial Average fell 981.36 points, or 2.82%, to 33,811.4, the S&P 500 lost 121.88 points, or 2.77%, to 4,271.78 and the Nasdaq Composite dropped 335.36 points, or 2.55%, to 12,839.29.

For the week, the Dow dipped 1.9%, the S&P dropped 2.8%, and the Nasdaq declined 3.8%.

The prospect of a more hawkish Fed has led to a rocky start to the year for equities, with Friday’s sell-off taking declines on both the S&P and Dow since the start of the year beyond 10%.

The trend is more pronounced in tech and growth shares whose valuations are more vulnerable to rising bond yields. The Nasdaq is down 17.9% in 2022.

Earnings are due next week for the four biggest U.S. companies by market capitalization: Apple, Microsoft, Amazon and Google parent Alphabet.

The quartet declined between 2.4% and 4.1% on Friday. Meta Platforms Inc, which also has results on deck for next week, dropped 2.1%, taking its losses in the last three days to 15.3%.

Investors are worried after streaming giant Netflix Inc’s dismal earnings earlier this week sent shockwaves through big tech and stay-at-home darlings which benefited from pandemic factors such as lockdown measures.

The volume on U.S. exchanges was 11.66 billion shares, compared with the 11.67 billion average for the full session over the last 20 trading days.

(Reporting by Bansari Mayur Kamdar, Amruta Khandekar and Anisha Sircar in Bengaluru and David French in New York; Editing by Marguerita Choy and Aditya Soni)

(Reuters) – AT&T Inc on Friday named Jeff McElfresh, who headed its largest business unit, as chief operating officer, part of the U.S. carrier’s efforts to refocus on its connectivity business following the merger of its WarnerMedia unit with Discovery Inc.

McElfresh has been with the company for more than 20 years and was most recently the head of AT&T Communications.

The COO role has been vacant since John Stankey became the chief executive officer in July 2020.

The Dallas, Texas-based firm on Thursday posted a 2.5% rise in revenue for its core phone and internet business in the first quarter, as the telecom giant benefited from the expansion of its fiber internet and 5G services.

(This story corrects paragraph 2 to say McElfresh was most recently CEO of AT&T Communications)

(Reporting by Tiyashi Datta in Bengaluru; Editing by Sriraj Kalluvila)

By David Lawder and Andrea Shalal

WASHINGTON -Indonesia’s new palm oil export ban will hurt other countries but is necessary to try to bring down the soaring domestic price of cooking oil driven up by Russia’s war in Ukraine, Indonesia’s finance minister told Reuters on Friday.

Sri Mulyani Indrawati said that with demand exceeding supplies, the ban announced earlier on Friday is “among the harshest moves” the government could take after previous measures failed to stabilize domestic prices.

“We know that this is not going to be the best result,” for global supplies, she said in an interview on the sidelines of the International Monetary Fund and World Bank spring meetings. “If we are not going to export, that’s definitely going to hit the other countries.”

China and India are among big importers of palm oil from Indonesia, the world’s largest producer accounting for more than half the world’s supply. Palm oil is used in products from cooking oils to processed foods, cosmetics and biofuels.

Indrawati said previous measures requiring producers to reserve stocks for domestic use did not result in “the level of prices that we want. It’s still too expensive for the ordinary household to buy those cooking oils.”

At this week’s meetings in Washington, policymakers have expressed concern about growing prospects of food shortages due to the war in Ukraine, a major producer of wheat, corn and sunflower oil. World Bank President David Malpass said repeatedly that countries should avoid hoarding of food stocks, export controls and other trade barriers to food.

COUNTRY NEEDS FIRST

But Indrawati, a former World Bank managing director, said that as a political leader and policy maker food security issues needed to be defined first at the country level, then regionally and globally.

She likened the current food supply situation to the early weeks of the COVID-19 pandemic, when countries competed with each other for masks, medical protective gear and other critical supplies.

“Just like we were facing during the pandemic, we know this is not good in the medium and long term, but in the short term, you cannot stand in front of your people when you have the commodity which is needed by your people and you let (supplies) just go out” of the country.

Indonesia’s move, which takes effect on April 28, caused prices of alternative vegetable oils to surge, with soybean oil hitting a record high on Friday. An Indian trade group called the ban “rather unfortunate and totally unexpected.”

Indrawati said her government would analyze the impact of the measure on global and regional market dynamics.

For palm oil and other food commodities, she said the World Bank and other international institutions needed to focus on “supply side measures” to increase production.

But Indrawati said Indonesia has limited ability to increase palm oil production due to environmental concerns. Since 2018, the government stopped issuing new permits for palm oil plantations, which are often blamed for deforestation and destroying habitats of endangered animals such as orangutans.

Instead, Indonesia was focusing on improving infrastructure to allow producers to become more efficient and increasing production of other crops in high demand, including corn and soybeans, she said.

(Reporting by David Lawder and Andrea Shalal; Editing by Dan Burns and Daniel Wallis)

By Ann Saphir

(Reuters) -With expectations for a half-percentage point rate hike at the Federal Reserve’s May meeting now locked in, traders on Friday piled into bets that the central bank will go even bigger in subsequent months, but one Fed policymaker pushed back, saying a more “methodical” approach was appropriate even in the face of too-high inflation.

“You don’t need to go there at this point,” Cleveland Fed President Loretta Mester told CNBC, referring to possibility of a 75 basis point rate hike. Traders are now pricing in two such outsized rate hikes, at the Fed’s June and July meetings.

Coming from Mester, one of the Fed’s more hawkish policymakers and a supporter of using half-point hikes to get inflation on a downward trajectory more quickly, it was a notable bid to tamp down market panic on a day when U.S. stock indexes tumbled.

“Let’s be on this methodical rather than overly aggressive path,” Mester told CNBC in what is likely to be the last public set of comments from Fed policymaker ahead of their May meeting.

Fed Chair Jerome Powell on Thursday gave a “go” sign to a half-point hike then and signaled he would be open to “front-end loading” the U.S. central bank’s retreat from super-easy monetary policy.

Those remarks solidified traders’ bets on a rise in short-term borrowing costs to the 0.75%-1% range at the Fed’s May 3-4 meeting, and sent them newly piling into expectations for bigger hikes in June and July.

At Friday’s market close, after Mester spoke, futures contracts tied to the Fed’s policy rate signaled a more than 80% chance of another 1.5 percentage point increase in the fed funds rate, to the 2%-2.25% range, by the close of the Fed’s July 26-27 meeting.

Some economists are also newly penciling in stepped-up policy tightening.

Jefferies chief economist Aneta Markowska on Friday said she expects the Fed to use a string of half-point hikes to get rates to a 2.25%-2.5% level by September, a more aggressive path than she had previously anticipated.

And Nomura Research analysts, who now see the Fed delivering increases of 0.75 percentage points at each of the Fed’s June and July meetings, said Friday that market bets could help cement that actual outcome.

“Stronger (market) pricing for such a move would likely ease the path for the FOMC and participants could likely forge a consensus on such action quickly,” they wrote in a note published early Friday.

The Fed lifted its policy rate by a quarter-percentage point last month in its first increase after what had been two years of a near-zero policy rate, though “many, many” Fed policymakers felt bigger rates hikes would be appropriate, Powell noted Thursday.

“50 basis points will be on the table for the May meeting,” Powell said. “I also think there’s something in the idea of front-end loading” the removal of accommodation, he added.

The Fed raised its target range for the fed funds rate to 0.25%-0.5% in March, from the 0%-0.25% range it had been for the prior two years.

Adding to the sense of urgency, even dovish Fed policymakers like San Francisco Fed President Mary Daly and Chicago Fed chief Charles Evans this week embraced the idea of a half-point hike in May and of getting interest rates to a “neutral” level by the end of the year.

Most at the U.S. central bank say that level is likely between 2.25%-2.5% in the long run.

But with inflation as high as it is — consumer prices rose 8.5% last month, well above the Fed’s goal of 2% — some observers say interest rates will need to rise even further for the “real” cost of borrowing to be high enough to start biting into economic activity.

Daly told reporters earlier this week that she believes 2.25%-2.5% is still a “reasonable” estimate for neutral, but noted that policymakers won’t really know until rates get closer to that level and they can observe what happens in the economy.

(Reporting by Ann Saphir; editing by Diane Craft)