Stocks slumped in early trade Tuesday as inflation fears sent large-cap tech-related shares skidding sharply lower.
What are major benchmarks doing?
The Dow Jones Industrial Average
fell 347.16 points, or 1%, to 34,395.66.
The S&P 500
gave up 50.91 points, or 1.2%, to trade at 4,137.52.
The Nasdaq Composite
tumbled 206.59 points, or 1.5%, to 13,195.27.
On Monday, a tech-led selloff sent the Nasdaq down 2.6% to its lowest close since March 31, while the S&P 500 slumped 1%. The Dow gave up a gain of more than 300 points that had taken it to an all-time high above 35,000 to end the day down 34.94 points, or 0.1%.
What’s driving the market?
Big tech shares continued to feel the pain Tuesday, with shares of Facebook Inc
Microsoft Corp. MSFT and Amazon.com Inc.
down more than 1%, and Google parent Alphabet Inc.
“There isn’t a clear catalyst behind this purge,” said Marios Hadjikyriacos, investment analyst at XM, in a note. “It seems to be a combination of inflation fears making a comeback and some market participants moving higher along the value spectrum, cutting their exposure to anything with a stretched valuation.”
The fact that the selloff has been mostly concentrated in tech and growth stocks, however, is encouraging in terms of the overall market outlook, Hadjikyriacos said, because it indicates investors haven’t lost faith in the economic outlook but are moving away from “more speculative” positions, which could even calm some “bubble concerns, considering what is being sold.”
Investors are also concerned about the labor market after a much smaller-than-expected rise in nonfarm payrolls in March was reported on Friday.
The National Federation of Independent Business said Tuesday its monthly survey found a record 44% of small businesses said job openings went unfilled in April.
Data on U.S. March job openings is due at 10 a.m. Eastern.
Investors will also hear from several Federal Reserve officials on Tuesday, including New York Fed President John Williams, Fed Gov. Lael Brainard, San Francisco President Mary Daly, Atlanta Fed Raphael Bostic, Philadelphia Fed President Patrick Harker, and Minneapolis Fed President Neel Kashkari.
Which companies are in focus?
L Brands Inc.
announced Tuesday that it would separate Victoria’s Secret and Bath & Body Works into two publicly traded companies through a tax-free spinoff that should be completed in August 2021. Shares of L Brands fell 1.9%.
late Monday said revenue climbed in the latest quarter as the company saw positive results from its COVID-19 vaccine trials in the U.K. and South Africa. Shares were down 22.8%.
Shares of SmileDirectClub Inc.
were down 5.7% after it disclosed a cybersecurity incident and its financial repercussions.
shares were down nearly 19% after the e-commerce retailer of secondhand luxury goods late Monday delivered a narrower first-quarter loss and sales that were above Wall Street expectations.
Shares of Perigo Co. PLC
were down more than 1% after the Dublin-based provider of consumer self-care products posted weaker-than-expected earnings for its first quarter on Tuesday morning.
Palantir Technologies Inc.
shares were down 2.8% after reporting results Tuesday morning.
What are other markets doing?
The yield on the 10-year U.S. Treasury note
rose 1.4 basis points to 1.615%. Yields and bond prices move in opposite directions.
The ICE U.S. Dollar Index
a measure of the currency against a basket of six major rivals, was down 0.1%.
Oil futures were under pressure, with the U.S. benchmark
down 1.8% at $63.78 a barrel on the New York Mercantile Exchange Gold futures
were lower, down 1% at $1,818.50 an ounce.
European equities fell sharply, with the Stoxx Europe 600
down 2.4% and London’s FTSE 100
Hong Kong’s Hang Seng Index
dropped 2%, while the Shanghai Composite
rose 0.4% and Japan’s Nikkei 225