Stocks fell as Treasury yields climbed on speculation the Federal Reserve will boost rates aggressively to contend with decades-high inflation. The expiration of options potentially amplified equity-market moves on Thursday.

Twitter Inc. closed lower as billionaire Elon Musk expressed doubt about whether he’ll succeed with his offer to buy the social-media giant, while citing a “Plan B” if the bid isn’t accepted. The specter of higher borrowing costs sank rate-sensitive technology companies, which led S&P 500 losses. Ten-year U.S. yields topped 2.8 per cent and the dollar rose as New York Fed President John Williams said that speeding up the pace of tightening to include hikes in increments of a half-percentage point is a “reasonable option.”

The upward shift in Treasury yields marked a reversal from the past two days, when traders dialed back expectations of Fed tightening after evidence that inflation was poised to moderate. That support withered in pre-holiday trading amid data showing import prices jumped more than economists anticipated. U.S. central bankers face a delicate balancing act in tightening to curb inflation without killing the economic recovery.

“It’s a tough environment,” said David Donabedian, chief investment officer at CIBC Private Wealth Management. “Inflation numbers are going to stay very high and haven’t peaked yet, and we’re also going to start to see a deteriorating outlook for economic growth -- not a recession, but significantly slower economic growth than certainly we’d anticipated as the year began.”

U.S. consumer sentiment unexpectedly rose to a three-month high in early April amid optimism about job growth and wage expectations. Separate data showed retail sales picked up in March, helped by a surge in gas station receipts that masked mixed results in other large spending categories. Initial jobless claims rose slightly last week, but remained at a historically low level.

Traders at Wall Street’s biggest investment banks had a better-than-expected quarter as the war in Ukraine compounded volatility already simmering on inflation concerns and a lingering pandemic. But as fears of recession creep in, questions are emerging about future earnings growth. Goldman Sachs Group Inc. and Morgan Stanley posted surprise increases in trading revenue while Citigroup Inc. and JPMorgan Chase & Co. also surpassed expectations for first-quarter results.

European Central Bank policy makers are forming a consensus around increasing interest rates in the third quarter to tackle record inflation, according to people familiar with the matter. The first hike in borrowing costs in more than a decade is expected to be by 25 basis points, the people said, asking not to be identified because the deliberations are private. An ECB spokesperson declined to comment.

Events to watch this week:

• U.S. stock and bond markets are among those closed for Good Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 1.2 per cent as of 4 p.m. New York time
• The Nasdaq 100 fell 2.3 per cent
• The Dow Jones Industrial Average fell 0.3 per cent
• The MSCI World index fell 0.7 per cent

Currencies

• The Bloomberg Dollar Spot Index rose 0.5 per cent
• The euro fell 0.6 per cent to US$1.0825
• The British pound fell 0.3 per cent to US$1.3076
• The Japanese yen fell 0.3 per cent to 125.95 per dollar

Bonds

• The yield on 10-year Treasuries advanced 13 basis points to 2.83 per cent
• Germany’s 10-year yield advanced eight basis points to 0.84 per cent
• Britain’s 10-year yield advanced nine basis points to 1.89 per cent

Commodities

• West Texas Intermediate crude rose 1.9 per cent to US$106.20 a barrel
• Gold futures fell 0.5 per cent to US$1,975.30 an ounce