S&P 500 falls 1% on Friday, putting it on track for third-straight losing week

Stocks sank on Friday as the S&P 500 headed toward its third down week in a row amid busy earnings and rising bond yields.

The Dow Jones Industrial Average fell 500 points, or 1.4%. The S&P 500 was 1.2% lower, and the Nasdaq Composite declined by 0.7%.

Companies reporting disappointing quarterly results led the market decline Friday. Snap shares fell 3% as the social media platform reported first-quarter revenue short of expectations even after showing strong growth in daily users.

Verizon shares fell almost 3% after the company reported a loss of 36,000 monthly phone subscribers in the first quarter. Gap shares plunged 13% after the company announced the CEO of its Old Navy division, Nancy Green, is leaving the business this week. Gap also slashed its outlook for net sales growth in fiscal 2022.

Friday's action followed a dramatic reversal Thursday after a speech by Federal Reserve chair Jerome Powell that saw major averages wiping earlier gains and closing lower. The Dow ended the day more than 300 points lower, while the S&P 500 dropped nearly 1.5%. The tech-heavy Nasdaq Composite bore the brunt of the sell-off on surging rates, sliding 2%.

"Stagflation concerns resurface on the back of real-time signs of a tight labor market and waning business sentiment, coupled with another bounce in 10-year Treasury yields — and all peppered with a deluge of earnings releases," Chris Hussey, a managing director at Goldman Sachs, said in a note.

For this week, the Dow is down 0.07% and on pace for its third losing week in a row. The S&P is down 0.8% on the week and attempting to break a two-week losing streak. The Nasdaq is down 1.6% week to date, on track to post its third negative week in a row.

"Despite April posting the strongest average price increase since World War II, and second-highest frequency of advance, the prospects of more aggressive rate tightening by the Federal Reserve in response to an inflation rate not seen since the early 1980s continues to weigh on stock prices and investor nerves," Sam Stovall, chief investment strategist at CFRA Research, told CNBC.

Health care stocks also retreated. HCA Healthcare dropped 15% on weak full year earnings and revenue guidance. Intuitive Surgical and Universal Health Services followed, falling 10% and 9%, respectively.

At the same time, traders are still digesting Powell's comments on the possibility of a larger-than-usual rate hike for next month.

Powell said during an International Monetary Fund panel moderated by CNBC's Sara Eisen that taming inflation is "absolutely essential" and a 50-basis-point hike is on the table for May.

After reversing higher on Powell's comments, the 10-year Treasury yield closed at 2.92% on Thursday. The 10-year yield was higher again on Friday, inching back up to 2.94%, near a three-year high.

"Central bank hawkishness and bond yields back up are again moving markets," Ross Mayfield, investment strategy analyst at Baird, told CNBC. "Nothing especially new but a fresh reminder of the monumental shift underway on the policy front. Powell did note there may be benefit to front-loading hikes and being aggressive early, this sets them up for the potential to cut later on if the economy stumbles."