Dow Jones Sells Off 460 Points As Inflation Fears Boost Bond Yields, Maul Stocks

Key market indexes extended already sharp losses midday Wednesday as the Dow Jones Industrial Average lost more than 460 points as big techs weighed.


The Nasdaq sank 2.3%, the S&P 500 shed 1.6% and the Dow Jones industrials fell nearly 1.4% in the stock market today. Small caps tracked by the Russell 2000 slumped 1.9%. Volume was lower on both major exchanges vs. the same time Tuesday.

Early Wednesday, the consumer price index jumped 4.2% year over year, the Labor Department reported. That was above economists’ forecast for a 3.6% increase and marked the highest inflation rate since September 2008.

The core CPI, which strips out volatile food and energy categories, rose 0.9% from March vs. expectations for a 0.3% rise. It was the sharpest monthly increase since April 1982. The 10-year Treasury yield rose 6 basis points, or nearly 4%, to 1.67% in morning trade, its biggest jump since March 29. The 10-year Treasury yield closed Tuesday at 1.62%.

Tech stocks, hit hard last week, remain under pressure. On Monday, the Nasdaq tumbled 2.6% to close below its 50-day moving average for the first time since March.

U.S. Stock Market Today Overview

Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 33823.39 -445.77 -1.30
S&P 500 (0S&P5) 4087.09 -65.01 -1.57
Nasdaq (0NDQC ) 13084.02 -305.41 -2.28
Russell 2000 (IWM) 215.37 -3.59 -1.64
IBD 50 (FFTY) 43.22 -1.25 -2.81
Last Update: 12:02 PM ET 5/12/2021

Last year, tech stocks boosted the Nasdaq to a 43.6% gain — its fifth-best year ever. The S&P 500 rose 16.3% in 2020 and the Dow added 7.2%. After a strong start this year and a short correction, the market has rebounded near record highs. Read The Big Picture for more detailed daily market analysis.

Covid-19 Update

The U.S. economy is trying to recover from the Covid-19 pandemic, which triggered nationwide lockdowns over a year ago. But many states are relaxing restrictions, and cases are plateauing or declining in some states as vaccinations roll out.

Cumulative Covid-19 cases worldwide have topped 160 million, with more than 3 million deaths, according to Worldometer. In the U.S., cases are now approaching 33.6 million with nearly 597,000 deaths, although the number of new cases and deaths in the U.S. has slowed dramatically in many states.

Dow Jones Losers And Winners (CRM), Microsoft (MSFT) and Apple (AAPL) were among the half-dozen blue chips down about 2% each.

Microsoft stock fell 2.5% in above-average trade to breach its 50-day moving average. Shares, on track for a third consecutive loss, are now below a 246.23 buy point of a flat base, according to MarketSmith chart analysis. If the stock retakes the entry, the buy zone goes up to 258.54. Microsoft is an IBD Leaderboard and IBD Long-Term Leader stock.

Apple, down 2%, slipped below its 50-day average on Tuesday and is now looking for support at its 200-day line. Shares are on track for a third straight decline. Apple has triggered the 7%-8% loss-cutting sell rule from a 135.63 buy point of a cup with handle.

Energy Stocks Outperform

But Chevron (CVX) gained 2.6% as it builds the right side of an eight-week cup base with a 112.80 buy point. West Texas intermediate crude prices rose nearly 2% to $66.52 a barrel.

Oil stocks have been in focus after Colonial Pipeline, which carries fuel from the Gulf Coast to the Northeast, halted pipeline operations Friday following a ransomware cyberattack. That sent gasoline prices surging.

Big banks Goldman Sachs (GS) and JPMorgan Chase (JPM) also avoided the rout.

JPMorgan stock, at one point up 0.6%, is trying to break out past a 161.79 buy point in a flat base. Shares are about 1% below the entry. The bank’s profit growth has accelerated the past two quarters from 9% to 19% to 324%, after two quarters of declines. Analysts expect a 120% jump in the current quarter. JPMorgan was one of the stocks featured in Tuesday’s IBD Screen Of The Day.

Goldman Sachs edged 0.3% higher before pulling back mildly into the red. It remains in potential buy range from a 356.95 entry cleared last week. Goldman stock’s buy range tops out at 374.80.

Outside The Dow

Solar, software and chip stocks led the downside among IBD’s 197 industry groups. Oil and gas, nonalcoholic beverage and financial stocks avoided the sell-off.

The Innovator IBD 50 ETF (FFTY) gave up 2.2% to slip further below its 50-day line. It’s on pace for a third straight decline. PLBY Group (PLBY) sank 10%, while MarineMax (HZO), Square (SQ) and Yeti (YETI) lost more than 5% each.

Only several financials bucked the sell-off with gains of less than 1% each: Western Alliance Bancorp (WAL), B. Riley Financial (RILY), Goldman Sachs and Ameris Bancorp (ABCB). But even these stocks saw their gains shrivel.

Follow Nancy Gondo on Twitter at @IBD_NGondo


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