US STOCKS-Wall St drops as strong inflation data fuels rate hike bets

  • Reuters
  • Stock Market News
US STOCKS-Wall St drops as strong inflation data fuels rate hike bets
Credit: © Reuters.

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* U.S. consumer prices jump more than expected in April

* Electronic Arts gains on upbeat revenue forecast

* Indexes down: Dow 0.57%, S&P 0.74%, Nasdaq 1.16% (Adds comment, details; updates prices)

By Medha Singh and Sruthi Shankar

May 12 (Reuters) - Wall Street's major averages fell on Wednesday after stronger-than-expected inflation data stoked fears of tighter monetary policy to combat a possibly longer period of inflation.

The Labor Department's data showed U.S. consumer prices increased by the most in nearly 12 years in April as booming demand amid a reopening economy pushed against supply constraints. Excluding the volatile food and energy components, it soared 0.9%, the largest gain since April 1982. money markets moved fully to price in a 25 basis point interest rate hike by December 2022 after the data. is uncertainty over how long inflation is going to exist within the current economic recovery because we can see increases in housing prices, commodities around the world and increase in demand for goods and services," Brian Vendig, president, MJP Wealth Advisors in Westport, Connecticut.

"The uncertainty over the path of rates and inflation is making investors reconsider their portfolios, especially in technology stocks and others that had done really well last year."

Rising commodity prices and signs of labor shortage have fueled worries over rising prices, triggering a selloff that sent the S&P 500 nearly 3% below its record closing high on Friday, even as the Fed reassured that any price pressure would be transient.

At 9:57 a.m. ET, the Dow Jones Industrial Average .DJI was down 195.17 points, or 0.57%, at 34,073.99, the S&P 500 .SPX was down 30.58 points, or 0.74%, at 4,121.52. The Nasdaq Composite .IXIC was down 155.20 points, or 1.16%, at 13,234.23.

Bank stocks .SPXBK , which tend to outperform in a rising interest rate environment, gained 1.1%. The energy sector .SPNY also added 1.4% as oil prices firmed about 1%. O/R

Nine of the 11 major S&P sectors were lower with technology .SPLRCI , consumer discretionary .SPLRCD and communication services .SPLRCL leading losses.

Among mega-caps, Facebook Inc FB.O , Inc AMZN.O , Apple AAPL.O , Google-parent Alphabet Inc GOOGL.O and Microsoft Corp MSFT.O fell between 0.6% and 1.2% as investors pulled out of the names on worries that higher U.S. rates could weigh on their lofty valuations.

Electronic Arts Inc EA.O rose 1.9% as it forecast annual adjusted revenue above market expectation, betting that demand for its titles like "FIFA 21" and "Apex Legends" would stay strong. Inc BMBL.O slipped 1% ahead of its first-quarter results due after market close.

Declining issues outnumbered advancers for a 2.66-to-1 ratio on the NYSE and for a 1.93-to-1 ratio on the Nasdaq.

The S&P index recorded three new 52-week highs and no new low, while the Nasdaq recorded 19 new highs and 35 new lows.

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