By Pete Schroeder

WASHINGTON -U.S. stocks tumbled on Friday while the U.S. dollar hit a more than two-year high as investors prepared for a bevy of interest rate hikes in a global inflation fight.

All three major Wall Street indices ended down more than 2% a day after Federal Reserve Chairman Jerome Powell indicated that the U.S. central bank was preparing a half-point interest rate hike at its May meeting, with more to come.

The Dow Jones Industrial Average closed down 2.82%, while the S&P 500 lost 2.77% and the Nasdaq Composite dropped 2.55%.

The MSCI world equity index, which tracks shares in 45 nations, fell 2.46%.

Powell drove headlines on Thursday by saying a 50 basis point rate hike is “on the table” at the Fed’s next meeting, adding that it “is appropriate to be moving a little more quickly” to combat inflation.

“Markets are very uneasy about the growing likelihood of a policy error by the Federal Reserve. When a Fed official suggests a 50 basis points hike, markets immediately start trying to price in 75 basis point hikes,” said Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia.

The prospect of aggressive hikes was a boon to the U.S. dollar, which surged to a more than two-year high on Friday. The dollar index, which tracks the greenback versus a basket of six currencies, was last up 0.6% to 101.18, clearing levels not seen since March 2020.

The dollar’s surge took a toll on fellow safe-haven gold, with spot gold prices falling 0.9% to $1,933.94 an ounce.

Yields on U.S. Treasury bonds were also on the uptick as traders prepared for higher rates, with short-dated bonds hitting three-year highs in Friday trading.

Two-year note yields, highly sensitive to interest rate moves, rose to 2.789%, the highest since December 2018, before dipping lower to 2.697% in the afternoon. Benchmark 10-year yields were last at 2.899%, after reaching 2.981% on Wednesday, also the highest since December 2018.

“We’re repeating the same message from central bankers, and every time each repetition ratchets short interest rates higher,” said Jim Vogel, an interest rate strategist at FHN Financial in Memphis, Tennessee.

Oil was down on the week, as concerns of looming interest rate hikes, weaker global growth and COVID-19 lockdowns in China hurting demand outweighed a potential European Union ban on Russian oil that would tighten supply. [O/R]

Brent crude fell 2% at $106.16 a barrel, while U.S. West Texas Intermediate (WTI) crude declined 2.03% to $101.69 a barrel.

(Reporting by Pete Schroeder; Additional reporting by Marc Jones in London, Stella Qiu in Shanghai and Tom Westbrook in Singapore; Editing by Chizu Nomiyama, Will Dunham and Mark Potter)

By Maria Caspani and Dawn Chmielewski

(Reuters) – Florida Governor Ron DeSantis on Friday signed a bill that strips Walt Disney Co of self-governing authority at its Orlando-area parks in retaliation for its opposition to a new law that limits the teaching of LGBTQ issues in schools.

The Republican-controlled legislature on Thursday approved the bill, which will eliminate the special governing jurisdiction that allows the company to operate Walt Disney World Resort as its own city. Within the 25,000-acre tract, it operates four theme parks, two water parks and 175 miles of roadway.

Disney’s special status “was really an aberration,” DeSantis said at a news conference where he signed the bill into law. “No individual or no company in Florida is treated this way.”

Disney did not immediately comment on the bill’s signing.

While the financial impact on the company and the state is uncertain, the change could alter how Disney operates its sprawling Central Florida empire and sour the close relationship it has enjoyed with the state for more than 50 years.

The governor on Friday said Disney would pay more taxes as a result of the law but did not elaborate.

DeSantis is a potential 2024 Republican presidential candidate who has courted conservative voters on issues such as immigration, abortion and LGBTQ rights.

With his latest move against Disney, DeSantis is attempting to burnish his conservative credentials by showing he is willing to stand up to what he described as a “woke” company based in California that does not share Florida’s values.

Disney initially did not publicly oppose the LGBTQ legislation last month, prompting criticism from that community and some employees. The company later condemned the law and said it would suspend political donations in Florida pending a review.

The law, dubbed the “don’t say gay” bill by critics, bans classroom instruction on sexual orientation or gender identity for children in kindergarten through third grade. DeSantis backed the measure, saying it would give parents more control over their children’s education.

Opponents call it a thinly veiled attempt to marginalize gay and transgender students, or the children of queer parents.

At a fundraiser in Seattle on Thursday, President Joe Biden weighed in on the clash between Disney and Florida Republicans. He said efforts to impose such constraints “have nothing to do with traditional conservative doctrine.”

“I respect conservatives. There’s nothing conservative about deciding you’re going to throw Disney out of its present posture because Mickey Mouse … should … not be able to say, you know, gay.”

While the bill appears to be an attack on Disney and sprawling Orlando theme parks, experts say the financial impact of the legislation on the company and the state is unclear at this stage.

DeSantis rushed the bill through the statehouse, pushing it through within three days of a special session, but it will not take effect until June 2023, giving the two sides time to adjust to the new reality.

The law dissolves the Reedy Creek Improvement District, which was created in the 1960s to lure Disney World to the state, after the much smaller Disneyland had become a hit theme park in California.

For more than half a century the district has enabled Disney to function like a county government, providing services such as fire-fighting, power, water and roads within Orange and Osceola counties. In turn Disney can issue bonds with tax advantages to pay for improvements.

Disney is a major political contributor in the state. In the 2020 election cycle, the company donated $4.8 million in total, including campaign funds to more than 100 individual Florida legislative members, some of whom sponsored Thursday’s legislation, state records show.

It is unclear if the state or the company will be harmed most now that the bill has become law.

The Walt Disney Resort paid $780.3 million in state and local taxes in 2021, according to a fact sheet commemorating the 50th anniversary of the theme park. Orange County Tax Collector Scott Randolph said the legislation will punish local taxpayers more than Disney.

(Reporting by Maria Caspani in New York and Dawn Chmielewski in Los Angeles; Writing by Daniel Trotta; Editing by Chizu Nomiyama and Matthew Lewis)

By David Shepardson

WASHINGTON -Boeing Co is preparing for a new delay in the 777X program that would push first deliveries by at least a year into early 2025, a source briefed on the matter told Reuters.

The delay is in line with an estimate given by the plane’s biggest customer – Emirates Airlines – whose president, Tim Clark, told Aviation Daily in an April 7 story he did expect to receive its first Boeing 777X before 2025.

The source confirmed the delay, first reported Friday by the Air Current aviation industry publication that said Boeing expects to delay the certification target until late 2024 – or by another nine to 12 months for the wide-body aircraft – with deliveries to follow in 2025.

The source spoke on the condition of anonymity because the revised target date had not yet been publicly released.

Reuters reported last month the Federal Aviation Administration (FAA) warned Boeing in a March 21 letter that existing certification schedules for the 737 MAX 10 and 777X were “outdated and no longer reflect the program activities.”

Boeing had earlier said it expected to win certification for the 777X by the end of 2023. Certification is needed before Boeing can begin deliveries.

Asked about the delay report, Boeing said in a statement Friday it remains “focused on working transparently with regulators and our customers.”

The 777X, known as the 777-9 and a larger version of the 777 wide-body jet, has been in development since 2013 and at one point was expected to be released for airline use in June 2020.

Boeing is also working to gain approval for the 737 MAX 10 by the end of the year and ahead of a key safety deadline set by Congress.

The FAA in March asked Boeing to provide a “mature certification schedule” for the MAX 10.

A 2020 law sets a December 2022 deadline for imposing a new safety standard for cockpit alerts. Only Congress can extend the deadline if the FAA does not certify the 737 MAX 10 by then.

In May 2021, the FAA told Boeing that, realistically, it would not certify the 777X until mid- to late 2023 and rejected a request by Boeing to clear a certification hurdle, citing numerous concerns about lack of data and the lack of a preliminary safety assessment for the FAA to review.

Boeing is also working to resume 787 Dreamliner deliveries. Reuters reported Wednesday it advised key airlines and parts suppliers that deliveries would resume in the second half of 2022.

Boeing’s swollen 787 inventory, amassed since it halted deliveries nearly a year ago over structural flaws, has locked up desperately needed cash and cut airline capacity.

(Reporting by David Shepardson and Tim Hepher; editing by Bernard Orr)

(Reuters) -Bed Bath & Beyond Inc is fielding interest from potential buyers for its Buybuy Baby business following activist pressure to sell the unit, the Wall Street Journal reported on Friday, citing people familiar with the matter.

The suitors include private equity firm Cerberus Capital Management LP and Tailwind Acquisition Corp, a blank-check firm chaired by Casper Sleep Inc’s former chief executive Philip Krim, the report said.

Bed Bath & Beyond, Cerberus Capital and Tailwind Acquisition did not immediately respond to Reuters requests for comment.

Shares of the company gained as much as 11% on the news before closing up 7% at $17.46.

The home goods retailer has been under pressure from activist investor and GameStop Chairman Ryan Cohen to explore strategic alternatives.

As part of a settlement with Cohen in March, Bed Bath & Beyond appointed three new directors to its board, two of them to the committee exploring options for the baby products chain.

(Reporting by Deborah Sophia in Bengaluru; Editing by Aditya Soni)

By Arathy Somasekhar

HOUSTON -Oil slipped on Friday, posting a weekly loss of nearly 5%, on the prospect of weaker global growth, higher interest rates and COVID-19 lockdowns in China hurting demand even as the European Union considers a ban on Russian oil that would tighten supply.

Brent crude settled down $1.68, or 1.6%, at $106.65 a barrel. U.S. West Texas Intermediate (WTI) crude declined $1.72, or 1.7%, to $102.07.

Global benchmark Brent hit $139 a barrel last month, its highest price since 2008, but both oil benchmarks declined nearly 5% this week on demand concerns.

The International Monetary Fund, which this week cut its global economic growth forecast for 2022, could further downgrade it if Western countries expand their sanctions against Russia over its war against Ukraine, and energy prices rise further, the agency’s No. 2 official said.

The German government will cut its growth forecast for 2022 to 2.2% from 3.6%, a government source said, while Chinese demand for gasoline, diesel and aviation fuel in April is expected to slide 20% from a year earlier, Bloomberg reported, as many of China’s biggest cities, including Shanghai, are in COVID lockdowns.

Federal Reserve Chair Jerome Powell on Thursday said a half-percentage-point increase in U.S. interest rates “will be on the table” at the next Fed policy meeting in May, pushing the dollar to more than a two-year high. A stronger greenback makes oil and other commodities more expensive for those holding other currencies.

“At this stage, fears over China’s growth and overtightening by the Fed, capping U.S. growth, seem to be balancing out concerns that Europe will soon widen sanctions on Russian energy imports,” said Jeffrey Halley, analyst at brokerage OANDA.

Speculators’ net long bets on the U.S. dollar fell for a third straight week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday.

SUPPLY TIGHTNESS

On the supply side, the Russia-Kazakh Caspian Pipeline Consortium (CPC) is expected to resume full exports from April 22 after almost 30 days of disruptions, sources said.

The U.S. oil rig count rose by one to 549 this week, the highest number since April 2020, according to a Baker Hughes Co report.

Still, supply tightness provided support as Libya loses 550,000 barrels per day (bpd) of output due to disruptions. Supply could be squeezed further if the EU imposes an embargo on Russian oil.

An EU source told Reuters this week the European Commission was working to speed up availability of alternative energy supplies, while a senior White House adviser said he was confident Europe is determined to close off or further restrict remaining Russian oil and gas exports.

The Netherlands said it plans to stop using Russian fossil fuels by the end of this year.

Morgan Stanley raised its third-quarter Brent price forecast by $10 per barrel to $130, citing a “greater deficit” this year due to lower supply from Russia and Iran, which is likely to outweigh short-term demand headwinds.

European refiners processed 9.04 million bpd of crude in March, down 4% from a month earlier and 4.8% higher than a year earlier, Euroilstock data showed.

U.S. oil refiners are expected to have about 1.08 million bpd of capacity offline for the week ending April 22, increasing available refining capacity by 47,000 bpd, research company IIR Energy said.

“While we may slide, there’s a certain point at which we will find support because the fundamentals here are just too tight for things to slide very far,” said Robert Yawger, executive director of energy futures at Mizuho.

(Additional reporting by Alex Lawler in London, Sonali Paul in Melbourne and Isabel Kua in SingaporeEditing by Marguerita Choy, Mark Potter and Paul Simao)

(Reuters) – All three Wall Street benchmarks fell more than 2% on Friday, stumbling towards the end of a week which has seen whipsaw moves caused by surprise earnings news, increased certainty around aggressive near-term interest rate rises and concern that far-right French presidential candidate Marine Le Pen could win an upset victory over incumbent Emmanuel Macron in Sunday’s election. [.N]

MARKET REACTION:

* STOCKS: Dow down 2.71%, S&P 500 down 2.65%, Nasdaq down 2.42%

* BONDS: The yield on the benchmark 10-year note fell to 2.9025%. [US/]

* FOREX: The dollar index rose 0.527% [FRX/]

* VIX: The VIX was up 23.5% at 28.01 and touched its highest level in more than a month

COMMENTS:

JOHN LYNCH, CHIEF INVESTMENT OFFICER, COMERICA WEALTH MANAGEMENT, CHARLOTTE, NC (email)

“The combination of Jerome Powell’s comments and some disappointing earnings news was too much for investors to handle heading into the weekend. Moreover, market-based breakeven inflation expectations are climbing, providing a more powerful statement on the potential for persistent pricing pressures than headlines have been suggesting.

“We believe the concerns over the likelihood of 50-basis point rate hikes at the next two FOMC meetings is an overreaction.  Approximately $150 billion in securities on the Fed’s balance sheet are maturing over the next few months, suggesting the central bank could still be purchasing up to $100 billion in bonds, essentially offsetting any impact from the interest rate moves.

“In the months ahead, though, balance sheet reduction will not require elevated asset purchases, providing a better lever for the Fed to pull regarding rates and runoff.”

STEPHEN MASSOCCA, SENIOR VICE PRESIDENT, WEDBUSH SECURITIES, SAN FRANCISCO “The market has concerns inflation is going to prompt central banks to tighten further and faster than investors are comfortable with and that it will have a negative effect on asset pricing including stocks,” “Inflation is starting to have an impact on corporate earnings and we saw that today.”

“It’s starting to be pervasive.” THOMAS HAYES, CHAIRMAN, MANAGING MEMBER, GREAT HILL CAPITAL LLC, NEW YORK

“This has nothing to do with Fed and interest rates. The one thing that no one is talking about is the French election on Sunday. There is a lot of fear in Europe that Le Pen gets elected. Le Pen is a populist who’d be potentially anti-euro and the fear is that it could be a shock along the magnitude of what Brexit was. Because if Le Pen wins, the knock-on implication is that they might withdraw from the European Union or that would be a possibility that’s on the table.

“No one’s thinking about that. It was evident with the selling into the 11:30 a.m. close in Europe and then it carried through with margin calls in the U.S. through 2:30 p.m. No we’re getting a little relief, not much, after the margin calls at 2:30 p.m. This is all about the election on Sunday because that would be a something that nobody’s pricing in.”

JAMIE COX, MANAGING PARTNER, HARRIS FINANCIAL GROUP, RICHMOND, VIRGINIA (email)

“Markets are very uneasy about the growing likelihood of a policy error by the Federal Reserve.  When a Fed official suggests a 50 basis points hike, markets immediately start trying to price in 75 basis point hikes.  It’s madness really.  Most investors would be well served to ignore the machinations of the pricing craziness and wait to see what actually happens with rates.”

(Compiled by the Global Finance & Markets Breaking News team)