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.