US Markets

US STOCKS-Inflation fears push S&P 500 to one-month low

Credit: REUTERS/MIKE SEGAR

Wall Street's main indexes fell for a second straight session and the S&P 500 hit a one-month low on Tuesday, as investors feared that rising inflation could push the Federal Reserve to tighten monetary policy faster than expected.

By Medha Singh and Sruthi Shankar

May 11 (Reuters) - Wall Street's main indexes fell for a second straight session and the S&P 500 hit a one-month low on Tuesday, as investors feared that rising inflation could push the Federal Reserve to tighten monetary policy faster than expected.

The outperformers of 2020, Apple AAPL.O, Amazon.com Inc AMZN.O, Microsoft Corp MSFT.O, Google-parent Alphabet Inc GOOGL.O and Tesla Inc TSLA.O fell between 0.8% and 2.4%, weighing the most on the benchmark index.

The yield on benchmark U.S. 10-year Treasury note US10YT=RR ticked up to session high of 1.631% 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/

"There is a real debate on whether this increase in inflation is transitory, and how it's going to play through," said Jonathan Golub, chief U.S. equity strategist at Credit Suisse.

"There is a certain level of inflation that will make (markets) uncomfortable, even if the Fed doesn't respond."

Rapid vaccinations, massive fiscal and monetary support and a better-than-expected quarterly earnings season had lifted the S&P 500 and the Dow to record closing highs as early as Friday.

However, on Tuesday, the CBOE volatility index .VIX jumped to its highest in two months to 23 points and all major S&P sectors moved to the red.

The energy index .SPNY saw the biggest slide of 1.9% due to weaker oil prices. O/R

At 11:49 a.m. ET, the Dow Jones Industrial Average .DJI was down 449.23 points, or 1.29%, at 34,293.59, the S&P 500 .SPX was down 40.71 points, or 0.97%, at 4,147.72. The Nasdaq Composite .IXIC was down 60.18 points, or 0.45%, at 13,341.67.

Simon Property Group Inc SPG.N fell 3.4% 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 LB.N fell 4.6% after the retailer said it will split into two publicly traded companies, Bath & Body Works and Victoria's Secret, deciding against a sale of its lingerie brand.

Declining issues outnumbered advancers for a 4.24-to-1 ratio on the NYSE and for a 2.12-to-1 ratio on the Nasdaq.

The S&P index recorded four new 52-week highs and one new low, while the Nasdaq recorded 14 new highs and 209 new lows.

Inflationhttps://tmsnrt.rs/2SxpkST

(Reporting by Medha Singh and Sruthi Shankar in Bengaluru; Editing by Arun Koyyur)

((Medha.Singh@thomsonreuters.com; within U.S. +1646 223 8780, outside U.S. +91 80 6182 2802; Twitter: https://twitter.com/medhasinghs;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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