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Wall Street closes lower as inflation jitters spark broad sell-off

EconomyMay 11, 2021 06:32PM ET
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© Reuters. FILE PHOTO: People are seen on Wall St. outside the New York Stock Exchange (NYSE) in New York City, U.S., March 19, 2021. REUTERS/Brendan McDermid/File Photo

By Stephen Culp

NEW YORK (Reuters) - U.S. stocks closed lower on Tuesday as rising commodity prices and labor shortages fed fears that despite reassurances from the U.S. Federal Reserve, near-term price spikes could translate into longer-term inflation.

While all three indexes pared their losses from session lows, the sell-off was fairly evenly dispersed across the sectors.

"Today feels like a catch-up in that tech has been weak so far this month and it’s finally spilled over into other areas of the market and we’re seeing broader weakness," said Ryan Detrick, senior market strategist at LPL Financial (NASDAQ:LPLA) in Charlotte, North Carolina.

Economic data released on Tuesday from the Labor Department showed job openings at U.S. companies jumped to a record high in March, further evidence of the labor shortage hinted by Friday's disappointing employment report.

The report suggests labor supply is not keeping up with surging demand as employers scramble to find qualified workers.

Burrito chain Chipotle Mexican Grill (NYSE:CMG) announced it would hike the average hourly wage of its workers to $15, a further sign that the worker shortage in the face of a demand revival could add fuel to the inflation surge.

That worker shortage, along with a supply drought in the face of booming demand could contribute to what is seen as inevitable prices spikes, which the U.S. Federal Reserve has repeatedly said are unlikely to translate into long-term inflation.

"The inflation concerns continue," Detrick said. "The supply chain issues coupled with record stimulus coupled with apparently a tighter labor market have all contributed to fears that inflation could trend higher over the summer months."

"I don’t think (the market) believes the Fed when it says they won’t raise rates until after 2023," Detrick added. "That could be where the market and the Fed do not see eye to eye."

Market participants will scrutinize the Labor Department's CPI report, due early Wednesday, for further signs of potential inflationary pressures. (Graphic on inflation) https://tmsnrt.rs/2SxpkST

The Dow Jones Industrial Average fell 473.66 points, or 1.36%, to 34,269.16, the S&P 500 lost 36.33 points, or 0.87%, to 4,152.1 and the Nasdaq Composite dropped 12.43 points, or 0.09%, to 13,389.43.

Of the 11 major sectors in the S&P 500, only materials ended the session green. Energy suffered the largest percentage loss, closing down 2.6%

The CBOE Volatility index, a measure of investor anxiety, closed at 21.85, its highest level since March 11.

Boeing (NYSE:BA) Co lost 1.7% after the planemaker announced deliveries of its 737 MAX fell to just four planes in April due to an electrical problem.

Tesla (NASDAQ:TSLA) Inc continued its slide, dropping 1.9% following the electric automaker's decision to expand its Shanghai plant owing to heightened U.S.-China tensions.

Mall REIT Simon Property Group Inc (NYSE:SPG) fell 3.2% after the company said it does not expect a return to 2019 occupancy levels until next year or 2023.

L Brands Inc (NYSE:LB) announced it will split into two publicly traded companies, Bath & Body Works and Victoria's Secret. Its stock dropped 1.8%.

Declining issues outnumbered advancing ones on the NYSE by a 2.85-to-1 ratio; on Nasdaq, a 1.62-to-1 ratio favored decliners.

The S&P 500 posted seven new 52-week highs and one new low; the Nasdaq Composite recorded 28 new highs and 224 new lows.

Volume on U.S. exchanges was 11.78 billion shares, compared with the 10.33 billion average over the last 20 trading days.

Wall Street closes lower as inflation jitters spark broad sell-off
 

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Comments (18)
Jacob Steinschlag
Jacob Steinschlag May 11, 2021 2:03PM ET
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Still wrong article. Nasdaq is green while Dow Jones is tanking, as shareholders are rotating back from value into growth.
William Bailey
William Bailey May 11, 2021 1:38PM ET
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Fed to the debtscue !!! Dont worry , be happy . Fed heroine coming to a market vien near you!!
Investing Man
Investing Man May 11, 2021 1:10PM ET
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“Inflation” is code for “we are manufacturing every excuse to take as much profit as we want and leave everyone else as bag holders”
Frederick Chotsky
Chotsky May 11, 2021 12:51PM ET
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last week the headline was "Poor jobs report eases fears of inflation"
rene topeka
rene topeka May 11, 2021 12:51PM ET
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they randomly find the reason in the same context. it's not analysis at all.
William Bailey
William Bailey May 11, 2021 12:51PM ET
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Banking system will collapse if they kerp pumping assets with limited debt
Chris Sundo
Chris Sundo May 11, 2021 12:37PM ET
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Tomorrow is the low ;)
Chris Sundo
Chris Sundo May 11, 2021 12:35PM ET
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What would we do without these well-timed sell-offs?
Investing Man
Investing Man May 11, 2021 12:23PM ET
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The fed has easy methods to deal with inflation. This is profit taking by the greediest in wallstreet. Simple as that. They just pump the inflation fear as an excuse to do it.
Jon Bal
Jon Bal May 11, 2021 12:05PM ET
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inflation is a 3rd world thing. USA is too smart for that fo happen
Steffen vdm
Steffen vdm May 11, 2021 12:05PM ET
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inflation doesn't "happen". It's created by greed, incompetence and ignorance. From what I see, we can tick all three boxes
Jon Bal
Jon Bal May 11, 2021 12:05PM ET
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Steffen vdm everyone wanted their $1200, $600 & $1400 and they got exactly what they asked for. whats the problem?
Pozz Tou Ca
Pozz Tou Ca May 11, 2021 12:04PM ET
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hello USA Google play store Cambodia 🌟
Jacob Steinschlag
Jacob Steinschlag May 11, 2021 11:58AM ET
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wrong article. Tech is leading the recovery.
scott clawson
scott clawson May 11, 2021 11:45AM ET
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inflation talk = the system ripping off the people.
Baris Duzalan
Baris Duzalan May 11, 2021 11:45AM ET
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spot on 👍🏻
Baris Duzalan
Baris Duzalan May 11, 2021 11:45AM ET
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If you hold long term, (excluding crypto) you'll win. This business is not for the weak minded. You've to not hear the fear mongering. Crypto is a different story. Governments will eventually regulate crypto and collect back all the stimulus money from the retail crypto investors. Doge will be the first to go down.
Vlad Lozovskiy
Vlad Lozovskiy May 11, 2021 11:18AM ET
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inflation jitters.  Lol lol lol. It is not jitters, it is a reality. Yet there is "lawmakers" asking for more stimulus, and monthly stimulus. And Biden is still silent about stopping madness.
Catharine Varady
Catharine Varady May 11, 2021 11:18AM ET
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https://nypost.com/2021/05/10/biden-people-able-to-work-must-take-jobs-or-lose-unemployment/biden is saying something...i take it as no more stimulus, go back to work to earn some living
Vlad Lozovskiy
Vlad Lozovskiy May 11, 2021 11:18AM ET
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Catharine Varady  This doesn't mean a thing.  He needs to quit giving unemployment. But "ask" people to go to work will not do.
Gangisterm vl
Gangisterm vl May 11, 2021 11:13AM ET
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OK, and how to think of all this in relation to all other stocks.....Money is worth less but since American companies are all paying with dollars the amount of profit regarding to another company stays the same.So invest in obligation could be wise. But... Even so here is a euro a euro of worth and a dollar is a dollar.. See in perspective.All countries printed money (perhaps not equally per person per country) but everything is in perspective...
Church of Bear Market
Church of Bear Market May 11, 2021 9:54AM ET
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Repent!
Joe Chia
Joe Chia May 11, 2021 8:48AM ET
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Ovzrvalue!! overvalue!!!! Go and all in the money into crypto bcoz there is no PE this kind of stuff to be judge by investors and just take it as a future hope of Richie... Lolz.So sell sell sell all till all futures to the bottom
Gary Smith
Gary Smith May 11, 2021 8:26AM ET
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There are a bunch of overstretched stocks out there - and now there is a general correction possibility of the horizon. Anyone holding good value should be somewhat OK. Anyone holding the usual over-priced bucket of stocks - buckle up. This pullback was inevitable....and I am surprised it didn't happen a little sooner.
king michael
king michael May 11, 2021 6:59AM ET
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With $22 trillion GDP and over $27 trillion of national debt which also grows about $4 trillion a year. FED has run out of gas and has been talking to rollback the printing $ policy. The government has been keep tight the policy preventing US tech companies to sell very high profit margin products to other countries. All those are pushing this country to bankruptcy soon. Market will drop to near zero and an bankruptcy wave is on the way in tech sectors.
Edward Chong
Edward Chong May 11, 2021 6:59AM ET
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haha u are very pessimistic.
Danny Danny
Danny Danny May 11, 2021 6:59AM ET
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I wont say drop to zero but it will be large correction and yes some companies will bankrupt.
Bill Bill
Bill Bill May 11, 2021 6:59AM ET
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Apple is going out of business! Haha
alex gallegos
alex gallegos May 11, 2021 6:59AM ET
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Okay everyone time to hit the reset button.
Gábor Kardos
Gábor Kardos May 11, 2021 6:47AM ET
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stretched valuation. cat, coca cola, mcdonalds, etc have p/e over 35... with 0 growth. that is streched valuation
 
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