Dow falls more than 500 points, capping worst week since October

The Dow Jones Industrial Average closed Friday with a loss of more than 500 points, falling 1.6 percent to finish its worst week of losses since 2020.

The Dow finished this week down 3.5 percent, its steepest five-day loss since October. The S&P 500 index closed with a loss of 1.3 percent Friday and the Nasdaq closed down 0.9 percent.

While all three indexes are still well above their starting points in 2021, the three consecutive days of losses have brought them below record highs set earlier this year.

Stocks have fallen steadily since Wednesday after the Federal Reserve upgraded its median projection of annual inflation to 3.4 percent from 2.4 percent.

A growing number of Fed officials also expect the central bank to begin raising interest rates from the current baseline of zero to 0.25 percent, but not until 2022 at the soonest.

The Fed was bound to begin raising interest rates at some point after 2021 with the U.S. economy on track to recover most, if not quite all of the jobs lost to the coronavirus pandemic by the end of next year.

Even so, the sooner launch date for Fed rate hikes spooked some investors since rising borrowing costs tend to suppress stock market activity.