Dow falls 681 points as rising inflation spooks investors

Pedestrians walk by the New York Stock Exchange before the opening bell on Wall Street in New York City on April 26.Photo by John Angelillo/UPI

May 13, 2021 (UPI) — U.S. markets tumbled Wednesday after reports of higher-than-expected inflation led to a sell-off in tech stocks.

The Dow Jones Industrial Average closed the day down 681.5 points, or 1.99%, while the S&P 500 fell 2.14% and the Nasdaq Composite declined 2.67%.

The Consumer Price Index last month increased 4.2% from a year ago, rising at its fastest pace since 2008, surpassing its expected rate of 3.6%. Excluding volatile food and energy prices, the CPI increased 3% from the same period in 2020 and 0.9% on a monthly basis.

“Investors who may have been looking for a reason to lighten up on a stock market that was up more than 10% year to date found a good one: rising inflation,” Chris Hussey, a managing director at Goldman Sachs said in a note.

Tech stocks suffered as Google’s parent company, Alphabet, lost 3.08%, Microsoft dropped 2.94%, Apple declined 2.49%, Amazon dipped 2.23% and Netflix slid 2.04%. Tesla stock also fell 4.42%.

Selling ramped up after the S&P 500 dropped below the prior day’s low as stocks rebounded Tuesday, causing the index to fall even further.

Concerns over inflation have been building amid economic recovery from the COVID-19 pandemic as a report from the Labor Department on Tuesday showed job openings reached a record high in March, while another survey showed a record number of small business owners reported difficulty filling their job postings.

“It’s not a matter of whether inflation is going to be firming over the next couple of months … it will,” Garrett Melson, a portfolio strategist at Natixis Investment Management Solutions told Yahoo Finance on Wednesday. “The bigger story is whether we’re seeing a persistent and structural shift higher in prices.”

Energy prices have also risen as a result of a cyberattack on the critical Colonial Pipeline, which prompted states along the East Coast to take emergency action to combat rising prices and high demand.


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