NEW YORK — Stocks dropped Thursday as investors get used to idea that the Federal Reserve might raise interest rates next month.
Major indexes fell from the start of trading, following European markets sharply lower, with banks and industrial companies hit the hardest.
By the close, Goldman Sachs had dropped 3 percent and Boeing fell 2 percent, the biggest declines in the Dow Jones industrial average. Several commodities sank for a second day, including gold, silver and copper.
With earnings season mostly over and little news to move prices, the focus remained on the suddenly higher odds that the Fed will increase rates in June, as minutes from its last meeting released Wednesday suggest.
“This is all about the Fed,” said Bill Strazzullo, chief market strategist at Bell Curve Trading. “Putting June on the table was something few expected.”
With the drop Thursday, the Standard and Poor’s 500 index has now slipped into a loss for year. Both it and the Dow index have fallen in five of the past seven days.
The Dow fell 91.22 points, or 0.52 percent, to 17,435.40. The S&P 500 lost 7.59 points, or 0.4 percent, to 2,040.04. The Nasdaq composite gave up 26.59 points, or 0.6 percent, to 4,712.53.
At the Fed’s meeting in April, policymakers indicated an increase in rates was likely, assuming the economy and labor market continued to strengthen. Higher rates diminish the appeal of high-dividend companies to investors seeking income.
“Many of these stocks already had significant moves up and were due for a correction,” said Chief Investment Officer Henry Smith of Haverford Trust. “They have decent yields, but high valuations.”
That said, some winners from the previous day became losers as investors scrambled to make sense of the new Fed stance.
Banks climbed after Wednesday’s release of the Fed minutes on the expectation they will be able to charge more for loans as rates rise. But investors apparently thought the buying went too far, and sold them heavily on Thursday. The sector dropped 0.9 percent.
Among other stocks making big moves, Walmart Stores jumped nearly 10 percent after reporting surprisingly strong sales and releasing an optimistic outlook. The world’s largest retailer rose $6.05 to $69.20.
Benchmark U.S. crude oil fell 3 cents to close $48.16 a barrel in New York. Brent crude, used to price international oils, dropped 12 cents to $48.81 a barrel in London.
Wholesale gasoline fell 2 cents to $1.63 a gallon, heating slipped less than a penny to $1.48 a gallon and natural gas rose 4 cents to $2.04 per 1,000 cubic feet.
