Stocks fall for a 3rd day; bitcoin sinks after a wild ride

Wall Street racked up more losses Wednesday as the stock market pulled back for the third straight day. The broad sell-off went beyond stocks, with the price of bitcoin and other cryptocurrencies falling sharply.

The Standard & Poor’s 500 index dropped 0.3% after recovering from a 1.6% slide earlier in the day. The benchmark index is on track for its second weekly loss in a row.

Bank stocks were among the biggest decliners. Goldman Sachs fell 1.7% and Wells Fargo lost 1.5%. A range of retailers and other companies that rely directly on consumer spending also pulled the market lower. Home Depot slid 0.7%, Gap fell 3% and L Brands dropped 3.1%.

Energy sector stocks, the biggest gainers this year, bore the heaviest losses as the price of U.S. crude oil skidded 3.5%.

Digital currencies fell sharply after China’s banking association issued a warning over the risks associated with digital currencies. A statement posted on the industry association’s website said all members should “resolutely refrain from conducting or participating in any business activities related to virtual currencies.”

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The S&P 500 lost 12.15 points to 4,115.68. The Dow Jones industrial average fell 164.62 points, or 0.5%, to 33,896.04. The blue-chip index had been down 586 points. The Nasdaq fared better than the rest of the market, shedding only 3.90 points, or less than 0.1%, to 13,299.74.

Smaller-company stocks also lost ground. The Russell 2000 index gave up 17.24 points, or 0.8%, to 2,193.64.

Bitcoin’s price fell 10.8% to $38,723, well below its all-time high of over $64,800 reached a month ago, according to the crypto news site Coindesk. It swung in a huge range of as low as $30,202 and as high as $43,621 over the course of the day.

The skid comes after Tesla recently said it would no longer accept bitcoin as payment for its cars, reversing its earlier position.

The selling was so intense that the website of Coinbase, an online brokerage for digital currencies, was temporarily down in the morning. Coinbase’s stock dropped 5.9%, ending about 34% below the peak it reached April 16, just two days after its IPO.

Investors continue to be focused on whether rising inflation will be only temporary. Prices are rising for such items as gasoline and food as the economy recovers from its more than yearlong malaise.

The Federal Reserve expects that rising inflation will be temporary and related to the recovering economy, but investors are still uncertain and have been more cautious.

The fear is that the Federal Reserve will have to dial back its extensive support if inflation persists. That includes record-low interest rates and the monthly purchase of $120 billion in bonds meant to goose the job market and economy.

The minutes from the central bank’s April meeting of policymakers, which were released Wednesday afternoon, reaffirmed the view that the Fed’s decision to keep its benchmark interest rate ultra-low remains the best policy approach, though some officials cautioned that some factors pushing inflation higher may not be resolved quickly.

For all the worries about inflation, however, many professional investors are echoing the Federal Reserve in saying that they expect rising prices to be “transitory.”

Higher interest rates are a drag on most of the stock market, but they are particularly painful for technology shares that are considered the most expensive and those bid up for profits expected far into the future.

Treasury yields mostly rose. The yield on the 10-year Treasury note rose to 1.67% from 1.64% late Tuesday.

Target gained 6.1% after reporting strong results as consumers, some flush with U.S. stimulus payments, were eager to spend as the pandemic eases.