Wall Street drops on inflation jitters, led by tech stocks
(Reuters) - Wall Street's main indexes fell on Tuesday, led by tech-related stocks, as investors feared that rising inflation could push the Federal Reserve to tighten monetary policy faster than expected.
The outperformers of 2020, Apple, Amazon.com Inc, Microsoft Corp, Google-parent Alphabet Inc and Tesla Inc fell between 0.8% and 2.4%, weighed the most on the S&P 500.
The 10-member NYSE FANG+TM index, which includes the FAANG group of stocks alongside Tesla, Alibaba, and Twitter Inc, declined 1%, extending the index's market cap loss of more than $442 billion so far this month.
The yield on benchmark U.S. 10-year Treasury note ticked up to session high of 1.629% ahead of consumer price index report on Wednesday.
Investors have grown wary of fast price rises even though the central bank has repeatedly said it views any inflation that occurs to be transitory. [US/]
"We've seen a spike in commodity prices, economic data has been very strong and an uptick in rates has really pressured the technology complex," said Dan Eye, head of asset allocation and equity research, Fort Pitt Capital Group.
"If you're valuing a high-growth company based on its earnings ten years out, those earnings into the future are worth a lot less today at higher inflation levels."
In a late session reversal on Monday, inflation jitters drove investors away from growth stocks to cyclicals, which benefit the most as the economy reopens, resulting in the S&P 500 logging its worst day in nearly eight weeks.
All major S&P sectors were in the red, with the energy index shedding 1.8%, the most due to weaker oil prices. [O/R]
At 10:00 a.m. ET, the Dow Jones Industrial Average fell 259.99 points, or 0.75%, to 34,482.83, the S&P 500 lost 30.14 points, or 0.72%, to 4,158.74 and the Nasdaq Composite lost 88.84 points, or 0.66%, to 13,313.02.
Simon Property Group Inc fell 3.3% after the U.S. mall operator said it does not expect a return to 2019 occupancy levels until next year or 2023, as it looks to play hardball in rent negotiations with tenants.
L Brands Inc fell 3% after the company said it plans to split itself into two publicly traded companies, Bath & Body Works and Victoria's Secret, after the retailer decided against a sale of the lingerie brand.
Declining issues outnumbered advancers by a 3.9-to-1 ratio on the NYSE and by a 2.5-to-1 ratio on the Nasdaq.
The S&P 500 posted three new 52-week highs and one new low, while the Nasdaq recorded 16 new highs and 203 new lows.
(Reporting by Medha Singh and Sruthi Shankar in Bengaluru; Editing by Arun Koyyur)
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