Wall Street reminded of risks as Fed mulls more intervention

Wall Street reminded of risks as Fed mulls more intervention

(Updates to late morning U.S. trading)

* Tech, bank stocks drag

* Treasury yields rise

* Gold, crypto prices also slip

By Lawrence Delevingne

Aug 19 (Reuters) - Wall Street stocks were lower on Friday, with U.S. Treasury yields and the dollar rising, as traders weighed continued economic risks and action the Federal Reserve might take on inflation.

High-growth and technology stocks such as Amazon.com Inc AMZN.O and Alphabet Inc GOOGL.O declined nearly 2%. Banks fell and were on track to end the week lower, potentially snapping their six-week winning streak. And an earnings-miss by heavy equipment maker Deere & Co. DE.N added to the risk-off mood.

The Dow Jones Industrial Average .DJI fell 0.61% to 33,791.09, the S&P 500 .SPX lost about 1% to 4,239.33 and the Nasdaq Composite .IXIC dropped 1.71% to 12,743.60.

Europe's STOXX 600 .STOXX was down 0.56%, pushed lower by data showing German producer prices, a leading indicator for inflation, posted their highest ever increases in July as energy costs continued to surge.

The MSCI world equity index .MIWD00000PUS , which tracks shares in 47 countries, was down 1.16%.

"When market participants start to return from their holidays and look back ... they will find central banks still far from having achieved their goals of reining in inflation," ING rates strategists said in a note to clients.

"That means a continued tussle between central bank tightening expectations and recession fears."

The Federal Reserve needs to keep raising borrowing costs to bring high inflation under control, a string of U.S. central bank officials said on Thursday, even as they debated how fast and how high to lift them.

The U.S. dollar benefited from the Fed's hawkish comments and investor caution, hitting a one-month high. The dollar index =USD was up 0.57% at $108.1 and the euro was down 0.43% at $1.0043 EUR=EBS .

The 10-year U.S. Treasury yield climbed to near a one-month high at 2.992% US10YT=RR .

Next week, investors will be paying close attention to minutes from the European Central Bank's July meeting, as well as comments by U.S. Federal Reserve Chair Jerome Powell when he addresses the annual global central banking conference in Jackson Hole on Aug. 26.

"Incoming data, on net, suggests the U.S. economy retains fairly healthy momentum," Michael Gapen, a Bank of America economist wrote in a client note. He cited improving motor vehicle assembly and retail sales data, but noted declining housing numbers.

"Incoming data was not uniformly strong ... and we note that stronger momentum will ultimately be met with additional policy rate firming," Gapen added.


Oil prices added a third day of gains. U.S. crude CLc1 rose 0.56% to $91.01 per barrel, while Brent LCOc1 was at $96.85, up 0.267 on the day.

Cryptocurrencies fell sharply, with sudden selling dragging bitcoin BTC= to a three-week low. It was last at $21,341, down nearly 9% on the day.

Gold was headed for its first weekly drop in a month after hitting a three-week low. Spot gold XAU= fell for a fifth straight session, down 0.57% at $1,748 per ounce, in what could be its longest losing streak since November 2021.

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Reporting by Lawrence Delevingne in Boston and Elizabeth
Howcroft in London; Editing by Kirsten Donovan and Chris Reese