The big four banks also weighed the index with CBA dropping 0.6 per cent, NAB losing 0.8 per cent, Westpac shedding 0.5 per cent and ANZ falling 0.4 per cent.

Wall Street slumped, despite a blowout profit report from Nvidia, following some mixed reports on the US economy.

The S&P 500 dropped 1.3 per cent for its worst loss in three weeks. It nearly wiped out its gain for the week, which had been a bright spot in what’s been a rough August.

The Dow Jones dropped 1.1 per cent, and the Nasdaq composite tumbled 1.9 per cent.

Stocks sank as Treasury yields stabilised following their tumble a day earlier. High yields in the bond market have been upping the pressure because they make investors less willing to pay high prices for stocks and other risky investments. They may be set to go even higher, depending on what the head of the Federal Reserve says in a speech scheduled for Friday.

The yield on the 10-year Treasury rose to 4.23 per cent from 4.20 per cent late Wednesday. It fell there from 4.33 per cent a day before, close to its highest level since 2007.

Yields found some traction following a couple of mixed reports on the US economy. One showed that fewer US workers applied for unemployment benefits last week. It’s the latest sign that the job market remains remarkably resilient despite high interest rates.

Another report said orders for long-lasting manufactured goods slumped by more last month than economists expected. That could be a signal that conditions are worsening for the struggling manufacturing industry, but orders actually rose more than expected for the month after ignoring airplanes and other transportation equipment.

For now, weaker-than-expected reports on the economy may counterintuitively be more welcome in financial markets. The economy has managed to avoid a long-predicted recession, but the fear is that it’s so solid that it will keep upward pressure on inflation.

The Federal Reserve has already raised its main interest rate to the highest level since 2001 in hopes of grinding down high inflation. High rates work to do that by slowing the entire economy and hurting prices for investments.

Hope had built that the Fed’s latest rate hike in July may prove to be the last of this cycle, after inflation cooled considerably since peaking above 9 per cent last summer. Traders also have made bets for the Fed to begin cutting rates early next year.

But a series of stronger-than-expected reports on the economy has diminished those hopes. That’s why Fed Chair Jerome Powell’s speech on Friday morning is so highly anticipated. He’ll be speaking at an event in Jackson Hole, Wyoming, that has been the site of major policy announcements in the past by the Fed.

The two-year Treasury yield, which moves closely with expectations for the Fed, rose to 5.01 per cent. A day before, it had dropped to 4.98 per cent from 5.05 per cent after a report suggested U.S. business activity is cooling in August.

Thursday’s weakness for stocks came despite a much stronger-than-expected profit report from Nvidia, one of Wall Street’s most influential stocks. That raised hopes that this year’s frenzy on Wall Street around artificial-intelligence technology isn’t just hype.

Nvidia first stunned the market three months ago when it said the quick adoption of AI would send its revenue soaring in the three months through July. Its sales came in even better than forecast, at $US12.51 billion ($19.5 billion), and the company gave a forecast for the current quarter that again blew past Wall Street’s expectations.

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Nvidia shot up more than 6 per cent in the morning and seemed to be headed for a record close. But its gain diminished through the day, and it finished up by just 0.1 per cent. It was nevertheless one of the strongest forces pushing up on the S&P 500, which saw more than 80 per cent of stocks within it fall.

In stock markets abroad, indexes were mixed in Europe after mostly rising in Asia.

With AP