US stocks sink for 3rd day as Treasury yields jump

US stocks gave up early gains and sank Friday, with the Nasdaq dropping one percent, as Treasury bond yields jumped to their highest level in nearly two years.

The 10-year Treasury note pushed to 2.50 percent, compared to 2.42 percent late Thursday, continuing a sell-off in bonds sparked by a slightly hawkish turn by the Federal Reserve that has raised expectations of higher interest rates all around.

At midday (1600 GMT) the Dow Jones Industrial Average was down 49.62 points (0.34 percent) at 14,708.70.

The broad-based S&P 500 fell 7.76 (0.49 percent) to 1,580.43, while the tech-rich Nasdaq Composite dropped 32.80 (0.97 percent) to 3,331.83.

"The S&P 500 has slid to fresh lows amid weakness in Treasuries. Recent selling in the 10-year note has pushed its yield higher by eight basis points to 2.505 percent," said

It was the third straight day of steep market losses, brought on by Fed Chairman Ben Bernanke's comments Wednesday that the Fed could possibly begin slowing its stimulus program -- pumping $85 billion a month into the economy via bond purchases -- later this year and wind it up completely by mid-2014.

The withdrawal of Fed stimulus for the US economy -- even if it signaled that growth is strengthening -- spooked stock markets around the world, causing 3 percent-plus losses across Europe on Thursday.

European markets had rebounded Friday but then turned lower again at about the same time as the Wall Street slide.

Software and cloud computing giant Oracle sank 8.3 percent on flat quarterly revenues, with sales falling shy of expectations.

Citigroup lost 3.2 percent and JPMorgan Chase 1.1 percent.

Restaurant chain operator Darden Restauarants, which owns Olive Garden and Red Lobster among other popular brands, fell 4.2 percent after reporting net earnings of $1.03 per share, one penny shy of expectations.

The company said it expected a "slow and uneven recovery in both the overall economy and our industry," necessitating an emphasis on affordability.

Used-car retailer CarMax lost 4.2 percent despite reporting that sales grew 23.4 percent compared with the year-ago quarter, and net profit rose 21.5 percent.

At midday the yield on the 10-year US Treasury was at 2.49 percent, while the 30-year jumped to 3.55 percent from 3.51 percent Thursday. Bond prices move inversely to yields.