By Caitlin McCabe, Will Horner and Xie Yu
Investors around the world retreated from stocks Tuesday, with a
selloff in technology companies spreading to other sectors as
concerns about inflation spurred a return of volatility in the
The Dow Jones Industrial Average tumbled 480 points, or 1.4%, in
recent trading, as investors pulled back bets on financials,
industrials and energy stocks. That put the blue-chip index on pace
for its steepest one-day decline since late February when worries
about a sharp rise in bond yields blunted momentum in the stock
Concerns about rising inflation have loomed over markets for
much of this year as the U.S. economy has heated up, boosted, in
part, by pent-up demand and government stimulus. Fears about a
sustained jump in inflation have weighed on growth stocks,
including those in the tech sector, for much of the year, while
cyclical shares have climbed higher on expectations of a full
On Tuesday, however, that trade reversed, as stocks ranging from
Home Depot to Chevron to American Express pulled back 2.6% or more,
dragging the Dow down. Only two companies in the index of blue-chip
stocks traded higher in the afternoon.
Many technology stocks, in contrast, traded higher in the
afternoon after falling sharply shortly after the morning bell. The
Nasdaq Composite recently traded down 0.1%, cutting its losses
after falling as much as 2.2% earlier in the day. The S&P 500
dropped 0.9% in afternoon trading, also paring earlier losses.
In bond markets, the yield on the 10-year U.S. Treasury note
edged up to 1.621%, from 1.601% Monday. Yields rise as prices
"It's a bit of a topsy-turvy market," said Chris Zaccarelli,
chief investment officer of Independent Advisor Alliance. "We have
a lot of news flow as far as gasoline shortages, the hack of
[Colonial Pipeline] and clearly everyone has been talking about the
jobs report. Does that mean anything or is it reflective of
weakness in the economy?"
"It's hard to tell with these crosscurrents moving as violently
as they are," he added.
Tuesday's wild swings in the stock market sent the Cboe
Volatility Index, or VIX, known as Wall Street's fear gauge,
climbing. It traded as high as 23.73 intraday, its highest level
since March 10. The VIX has hovered below 20 for the past several
weeks as the U.S. stock market has climbed to repeated records.
The S&P 500 and Dow industrials set records as recently as
Friday after a lackluster jobs report for April sent stocks
climbing on hopes that it would prompt the Federal Reserve to
further delay a tightening of monetary policy.
Federal Reserve Gov. Lael Brainard said Tuesday that the central
bank remains far from achieving its inflation and employment goals,
noting that risks remain even while the U.S. outlook is bright.
Other Fed officials have said in recent days that the economy still
needs the support of the central bank's near-zero interest-rate
stance and its $120 billion in monthly bond purchases.
Still, those comments haven't been enough to assuage investors'
fear of inflation and eventual tightening of monetary policy. Many
are betting that inflation is likely to climb steeply in coming
months, driven by pent-up spending as well as supply bottlenecks
and a leap in commodity prices.
Investors are keeping a close eye on the sharp rise in the
prices of commodities such as corn and lumber, and many remain
concerned about supply-chain issues. Companies ranging from auto
makers to semiconductor giants have warned about supply chain
setbacks in recent months.
"Issues with the supply chain have been underappreciated," said
Christopher Harvey, head of equity strategy at Wells Fargo
Securities. "It looks like your economically sensitive names are
getting hit related to these issues."
Among the S&P 500's 11 sectors, energy stocks suffered the
worst fall Tuesday. Occidental Petroleum lost 7.5%, while Exxon
Mobil lost 3.1%.
Other cyclical companies that posted big losses Tuesday included
home builder PulteGroup, which lost 4.2% and Royal Caribbean, which
Google parent Alphabet and Apple were among the megacap tech
stocks that retreated, both falling 0.8%. Tesla lost 1.4%, while
semiconductor giant Intel lost 1.4%.
Palantir Technologies, in contrast, jumped 8.3% after the
dating-mining-software specialist reported better-than-expected
revenue and gave a strong forecast.
In corporate news, Novavax shares plummeted 14% after the
company said it delayed plans to seek regulatory clearance for its
Overseas, the pan-continental Stoxx Europe 600 dropped 2%. In
Hong Kong, the Hang Seng Index fell 2%. Japan's Nikkei 225 slumped
3.1%, while South Korea's Kospi index retreated 1.2%.
Fresh data showed that factory-gate prices in China jumped last
month by the most in 3 1/2 years, adding to concerns about
inflationary pressures spreading globally.
Write to Caitlin McCabe at firstname.lastname@example.org, Will Horner
at William.Horner@wsj.com and Xie Yu at Yu.Xie@wsj.com
(END) Dow Jones Newswires
May 11, 2021 15:42 ET (19:42 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.