U.S. stocks fell on Friday after the Federal Reserve said it will not extend a pandemic-era rule that had allowed banks to relax capital levels. The Dow Jones Industrial Average slid 340 points, while the S&P 500 was off by 0.7%. The tech-heavy Nasdaq Composite traded 0.3% lower.

The central bank on Friday declined to extend a rule expiring at the end of the month that relaxed the supplementary leverage ratio for banks during the pandemic. The rule allowing banks to hold less capital against Treasurys and other holdings was implemented to calm the bond market during the crisis and encourage banks to lend.


The decision could have some adverse effects, traders have warned, if in response banks sell some of their Treasury holdings. That could send yields even higher at a time when a rapid rise in rates is already unnerving investors.

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