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Stock market news live updates: Stocks post back-to-back sessions of declines, Dow drops by the most since February

Emily McCormick · Reporter
10 min read

In This Article:

Stocks fell Tuesday, with the major indexes adding to Monday's losses as inflation concerns rose.

[Click here to read what's moving markets heading into Wednesday, May 12]

The Dow's losses accelerated into the end of the trading day, bringing the index's decline to nearly 500 points, or about 1.4%. A day earlier, the Dow briefly topped 35,000 for the first time ever before erasing gains to end in the red. The Nasdaq ended just below the flat line after its worst day since March on Monday, with technology stocks sliding as traders rotated away from high growth stocks that could be impacted by rising inflation during the recovery out of the pandemic.

With a strong quarterly earnings season winding down – aside from a couple notable names including Disney (DIS) reporting later this week – investors are taking stock of the next catalysts for markets, with rising prices a key focal point.

According to data from Bank of America, mentions of inflation have increased nearly 800% year-over-year in quarterly earnings calls and reports. Bank of America equity strategist Savita Subramanian said that strong earnings, rising inflation and improving corporate sentiment "all point to a continued rotation into Value."

“We have an accelerating growth environment with the prospects for some inflation. And for investors, when they think about inflation, they tend to move away from tech stocks, because they think of tech stocks as longer-duration assets in which you're not going to be paid well into the future, and they'd instead rather own parts of the market that are more highly correlated with nominal GDP, " Brian Levitt, global market strategist for Invesco, told Yahoo Finance. "What we're going through right now is a reversion back to where we likely otherwise would have been had it not been for the coronavirus outbreak. In that reversion, you'll see more economic sensitive names outperform."

"But it doesn't change the long-term structural story," he added. "The long-term structural stories, all the shifts that are taking place in society, they don't change. And those tech stocks are on the cutting edge of it, so they were bound for some type of volatility or some type of correction, particularly if inflation concerns increased.”

This week, investors are set to also receive the latest monthly consumer price index and producer price index from the Bureau of Labor Statistics, which are each expected to reflect a strong jump in prices over last year's pandemic-depressed levels. The sustainability of these inflationary trends will ultimately guide the Federal Reserve's monetary policy decisions, determining whether they will maintain their current accommodative policies that have boosted both the economy and underpinned asset prices, or pull back some of their support.

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