Stocks lower as inflation, retail sales data disappoints

In this Nov. 16, 2020 file photo a man wearing a mask passes the New York Stock Exchange in New York. Stocks are edging mostly lower in early trading on Wall Street Tuesday, June 15, 2021, a day after the S&P 500 and the Nasdaq hit their latest record highs. Technology stocks, which had led the gains a day earlier, were in the losing column. (AP Photo/Mark Lennihan, File)

Stocks were lower in afternoon trading Tuesday as investors reacted negatively to a report that once again indicated inflation was creeping higher as well as data that showed Americans slowed their spending last month.

The S&P 500 was down 0.3% as of 12:55 p.m. Eastern. The Dow Jones Industrial Average was down 125 points, or 0.4%, to 34,267 and the Nasdaq fell 0.7%.

Technology stocks were the biggest drag on the market, though most sectors within the benchmark S&P 500 were lower. Energy companies had solid gains as the price of crude oil edged higher.

The Labor Department said Tuesday that wholesale prices, driven by rising food costs, increased 0.8% in May and by a unprecedented amount over the past year as the U.S. economy emerges from pandemic lockdowns and pushes inflation higher. The monthly gain in the producer price index, which measures inflation pressure before it reaches consumers, followed a 0.6% increase in April and a 1% jump in March.

Over the past 12 months, wholesale prices are up 6.6%, the largest 12-month increase on records going back to 2010.

“From a prices standpoint, we’re seeing inflationary pressure and we believe the jury is still out on the timing and extent of when we see a leveling or whether this new new normal of higher prices is cemented,” said Greg Bassuk, founder and CEO of AXS Investments.

Investors will hear from the Federal Reserve on Wednesday, when the nation's central bank will finish up its regular policy meeting. The Fed is not expected to raise interest rates in response to higher inflation this month, but investors will be looking for any clues to see if Fed policymakers are becoming concerned about the recent inflationary data.

The market has remained choppy as Wall Street looks for clues as to just when the central bank could start tapering its bond purchases and other stimulus measures put in place to support the economy during the pandemic.

There are some limited signs that inflation may be cooling in some parts of the economy. Lumber and copper prices have dropped from their highs a few weeks ago. Copper is now trading at an eight-week low. Gold and copper miner Freeport-McMoRan fell 7.1%.

Bond yields were relatively stable. The yield on the 10-year Treasury note edged up to 1.51% from 1.50%.

Meanwhile retail sales fell in May, dragged down by a decline in auto sales and a shift by Americans to spend more on vacations and other services instead of goods. Total sales dropped a seasonal adjusted 1.3% in May from the month before, the Commerce Department said Tuesday. Wall Street analysts expected a smaller decline of 0.5%.

Part of the decline in retail sales had to do with supply chain issues, most notably the lack of semiconductors, which has cut into the availability of electronics and automobiles for months now.