US Stocks Open Lower, Pulled by Tech 05/11 09:34
Stocks were falling moderately on Tuesday as big technology stocks continued
a two-day slide. Inflation remains a growing concern among investors, which
would be a major drag on the overall market if allowed to accelerate.
(AP) -- Stocks were falling moderately on Tuesday as big technology stocks
continued a two-day slide. Inflation remains a growing concern among investors,
which would be a major drag on the overall market if allowed to accelerate.
The S&P 500 index fell 0.7% as of 10 a.m. Eastern. The Dow Jones Industrial
Average fell 0.8% and the technology-heavy Nasdaq Composite was down 1%.
Big technology companies were dragging down the market in the early going.
Apple fell 2%, extending its loss from the day before. Facebook, Cisco Systems,
Microsoft and Google were also all down roughly 1% or more.
Tech stocks have gotten hit in recent days as concerns about inflation
impact the overall stock market. Commodity prices have risen, particularly for
industrial metals such as copper and platinum, as well as for energy
commodities like gasoline and crude oil. Tech stocks, which get most of their
valuation from the future profits those companies are likely to earn, become
less valuable if inflation decreases the value of those earnings.
Inflation has been a concern for investors since bond yields spiked earlier
this year, but yields have mostly stabilized since then. The yield on the
10-year Treasury was steady at 1.61%. Despite reassurances from the Federal
Reserve and a much weaker-than-expected U.S. jobs reading last week, investors
have refocused on the potential for surging prices to pressure central banks
into tapering off on their massive stimulus and ultra-low interest rates,
Rising commodity prices have begun to push prices of some consumer products
higher but analysts expect increases to be mild and tied to the growing
economy, even as the jobs market lags behind. Consumer confidence and retail
sales are regaining ground as people get vaccinated and businesses reopen.
Signals of inflation have popped up in other markets. China reported its
strongest increase in producer prices since October 2017 last month, as supply
constraints cascaded into manufacturing.
Meanwhile, the most recent round of corporate earnings reports showed a
broad recovery touching many different sectors and industries during the the
first three months of the year. Much of that was anticipated ahead of the
reports and investors are now far off from the next big round of results.